by Calculated Risk on 7/05/2007 02:45:00 AM

From the WSJ: Number of Unsold Homes Increases

The number of homes on the market in 18 major metropolitan areas continues to grow.

Total listings of homes in these metro areas at the end of June was up 2.5% from May, according to figures compiled by ZipRealty Inc.

If the NAR number follows Zip Realty for June, then the June existing home inventory levels will be over 4.5 million - another all time record - and total inventory, including new homes, will be over 5 million units.

Click on graph for larger image.

This graph is based on the Zip Realty estimate of the inventory increase for existing homes in June. Inventory usually increases in June, but the levels of inventory (already an all time record) are a reason for concern.

A 2.5% increase would put inventory at 4.54 million. A word of caution: we have seen the Zip Realty estimate vary significantly from the NAR estimate in the past, probably because the Zip Realty numbers are only a subset of the total NAR numbers.

The second graph shows the impact on the "months of supply" using the Zip Realty estimate for inventory, and the NAR estimate for pending home sales (down 3.5%).

This would put months of supply at about 9.4 months - very close to my estimate of the peak this summer of 9.5 months. Once again, this is just an estimate.