Check out this great article from the folks over at Calculated Risk Blog. It helps explain why housing inventory for sale is so incredibly low. Don’t worry housing inventory for is going to increase.
Another update: I’ve been using inventory numbers from HousingTracker / DeptofNumbers to track changes in inventory. Tom Lawler mentioned this last year.
According to the deptofnumbers.com for monthly inventory (54 metro areas), listed inventory is probably back to early 2005 levels. Unfortunately the deptofnumbers only started tracking inventory in April 2006.
This graph shows the NAR estimate of existing home inventory through December (left axis) and the HousingTracker data for the 54 metro areas through January.
Click on graph for larger image.
Since the NAR released their revisions for sales and inventory, the NAR and HousingTracker inventory numbers are tracking pretty well.
Seasonally, housing inventory usually bottoms in December and January and then starts to increase again in February. So inventory should increase over the next 6+ months.
The second graph shows the year-over-year change in inventory for both the NAR and HousingTracker.
HousingTracker reported that the January listings – for the 54 metro areas – declined 17% from the same month last year. The year-over-year decline will probably start to slow since listed inventory is getting close to normal levels. Also if there is an increase in foreclosures (as expected), this will give some boost to listed inventory.
This is just inventory listed for sale, sometimes referred to as “visible inventory”. There is also a large “shadow inventory” that is currently not on the market, but is expected to be listed in the next few years. Shadow inventory could include bank owned properties (REO: Real Estate
Owned), properties in the foreclosure process, other properties with delinquent mortgages (both serious delinquencies of over 90+ days, and less serious), condos that were converted to apartments (and will be converted back), investor owned rental properties, and homeowners “waiting for a better market”, and a few other categories – as long as the properties are not currently listed for sale. Some of this “shadow inventory” will be forced on the market, such as completed foreclosures, but most of these sellers will probably wait for a “better market”.
However listed inventory has clearly declined in many areas. And it is the listed months-of-supply (currently 6.2 months) combined with the number of distressed sales that mostly impacts prices.
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