In both (Old) Sindarin and (Old) Noldorin, an intervocalic [s] became [h]. This change is somewhat obscured, because later still [h] vanished after vowels. The clearest Sindarin examples are:

• ✶tindōmi-sel(dĕ) > tindúmhihel > S. Tinnúviel “Nightingale” (PE19/73).
• √SAM > ahawv > S. aw, past tense of sav- “to have” (PE17/173).

This sound change is the reason for the soft mutation of initial s to h in Sindarin and Noldorin. It was also a factor in the use of a¹ “and” < √AS “beside”, which sometimes appears as ah before words beginning with a vowel: Athrabeth Finrod ah Andreth “The Debate of Finrod and Andreth” (PE17/41, MR/329). Clear examples are even more numerous in Noldorin:

• ᴹ✶barasā́ > ON. baraha > N. bara “fiery, eager” (Ety/BARAS).
• ᴹ✶khyelesē > khelesa > ON. kheleha > N. hele “glass” (Ety/KHYEL(ES)).
• ᴹ√PEL(ES) > pelesi > ON. pelehi > N. peli, plural of N. pêl “fenced field” (Ety/PEL(ES)).

As the last example shows, this sound change could sometimes result in irregular plurals; the plural thely for S. thôl “helmet” (< *tholos?) may be a later example of such an irregular plural, though it was eventually reformed to regular plural thuil (PE17/188). Based on the Noldorin examples, it seems this phonetic development took place in the Old Noldorin/Old Sindarin period, as suggested by David Salo (GS/§4.71). Tolkien explicitly described this sound change in a couple places:

In Noldorin {however} s remained voiceless and became medial h (Outline of Phonetic Development [OP1], 1930s, PE19/34, note #28).

The sign ½ was reintroduced from the original Feanorian general alphabet only in late ON to denote h (at first absent in ON) redeveloped from initial kh, hy and intervocalic s (Feanorian Alphabet, 1930s, PE22/25).

The sound h did not exist in the older period. It redeveloped in ON (i) from d = kh > χ when it stood in absolute initial position in a word group; (ii) from older 9 = [ɧ] in the same position; (iii) for s between vowels (ibid., PE22/29).

A nearly identical sound change occurred in Welsh, where [VsV] > [VhV] > [VøV] (WGHC/§94ii). It seems that this change took place when s was final after a vowel as well:

• ᴹ✶ndīse > ON. ndīs > N. dîs “bride” (Ety/NDIS).

N.B. N. dîs “bride” cannot be direct from ON. dîs since medial and final s were lost in Exilic Noldorin. Its retention is probably due to blending with dissa. Thus dîs is a blend in early Exilic of dî (which survives) and dess (which does not except as contributing to the sense “woman”, c.f. bess properly “wife”). ON. dī is a later development of nī under influence of dīr. Exilic dī is from this and ON ndīs (EtyAC/NDIS).

Such developments must have been rare, however, since earlier still (perhaps even in Ancient Telerin) any final [s] vanished in polysyllables, so this sound change could only apply to monosyllables like ON. ndīs. It seems likely the mechanism was [-Vs] > [-Vh] > [-Vø]. Based on the above example, it seems the change of final [s] to [h] probably occurred later than between vowels, maybe in the Sindarin/Noldorin period rather than in Old Sindarin/Old Noldorin. The relative lateness of this change could help explain why the soft mutation of s was to h rather than causing s to vanish, since the sound change at word boundaries probably occurred later, in the Sindarin/Noldorin period.

Conceptual Development: Intervocalic s is fairly common in Gnomish, which therefore could not have had this phonetic development, for example: G. ausirol “fortune”, G. nusiol “sagacious”, G. orosaura “sunrise”. The same is true of the Early Noldorin of the 1920s: ᴱN. Borosaith “Everhungry” and ᴱN. Broseliand. However, in the Early Noldorin of the 1920s, initial s- often (but not always) became h-, as noted by Roman Rausch in Historical Phonologies of Ilkorin, Telerin and Noldorin around 1923 (HPITN/§4.1.1):

• ᴱ✶siktā > ᴱN. haith “moist, wet” (PE13/147, 163).
• ᴱ✶surı̯akta > ᴱN. huiriaith or hyriaith “gale” (PE13/163).

There is no sign of this initial development in Sindarin/Noldorin, except in the soft mutation of s to h.