The Red House is a closely observed domestic drama that gives the impression of being a random slice-of-life, but in which every character is coming to terms with something or experiencing a revelation. The action is subtle and often interior, and what really counts is not what happens so much as the sharp observations of how people behave and feel, and the gap between the two.

Mark Haddon's second book, A Spot of Bother, made it clear he was becoming a master of the excruciating family set-piece. The Red House confirms it. Family  "that slippery word, a star to every wandering bark, and everyone sailing under a different sky"  has become his speciality.

The novel opens impressionistically, introducing eight people speeding towards the same spot by train and car. Images rush past windows, glimpsed and gone. The destination is a self-catering holiday cottage near Hay-on-Wye, where there will be "Scrabble, a tatty box in some drawer, a pack of fifty-one playing cards, a pamphlet from a goat farm". And, of course, rain.

The week's holiday has been arranged by wealthy, middle-aged Richard, attempting to reconcile with his long-estranged sister Angela in the wake of their mother's death. As adult children of emotionally damaged parents, their shared past has left them with different impressions and sympathies, as well as a raft of baggage which has impacted on their own families.

Richard is married to second wife Louisa, a pretty fortysomething from a few rungs down the social ladder; Angela's spouse is Dominic. Jaded, beset by financial worries, their marriage has declined into a state of loveless habit. They bring along 17-year-old Alex, aching with testosterone, 16-year-old Daisy, who has recently found God, and eight-year-old Benjy, a fearful child struggling with the first pangs of existential angst. Richard and Louisa are accompanied by Louisa's teenage daughter Melissa, minx and bully, a little madam diligently hardening her carapace in preparation for life.

Eight people who hardly know each other stuck together for a week: a timeless scenario. We know there will be crushes, quarrels, jealousies, undercurrents. Alliances will rise and fall. Haddon achieves a remarkable mélange of streams of consciousness, snatches of books, music, TV, private thoughts, lists, letters, all intertwined with sharply observed vignettes of everyday banality, soaring flights of description and odd bursts of heavy-handed portentousness. Numinous evocations of the landscape join the mix, meditations on the old house's history and past inhabitants, its physical and qualitative place in reality. Watching over it all from the hill above, projected there by the unresolved grief of her mother, is the ghost of Karen, "little monster, features melted into the centre of her face". She was the stillborn daughter of Angela and Dominic, who would have turned 18 during the holiday week.

There is no central character. The viewpoint changes constantly, sometimes three or four times in a page. Mostly this works. Gradually, the characters come into focus, some more so than others. The adults are less clear and less engaging than the children, the male characters in particular  the two men are unmemorable and not particularly distinguishable. It's the young people who steal the book: Alex, lusting after both Melissa and her mother, despising his father and locking horns with alpha male Richard; Daisy seeking meaning in the mess around her, earnestly trying to be good; and selfish Melissa, whose sense of self "depended so much on other people being in the wrong".

It's poor little Benjy, though, who catches at the heart, worrying away about life after death. "Do you believe in reincarnation?" he asks his big brother hopefully, and on receiving a firm negative in response, "stopped listening to what Alex was saying and wrote his name using risotto to stop himself crying". He "wanted to come back as a panda or a gorilla, but he would agree to come back as anything if he could only be assured that he was coming back".

Death has hovered over Haddon's work from the start, but it makes its presence felt a little more with each book. The Red House is his darkest work yet, but it's not cynical. There are no grand epiphanies. Life just goes on in its usual ramshackle way, generously offering up new mornings. By the time they're packing up to leave at the end of the week, has anything really changed? Superficially very little. We are left dangling, but in a strangely satisfying way.

 Carol Birch's Jamrach's Menagerie is published by Canongate.