Monday, August 11, 2014

Weekly Update: Housing Tracker Existing Home Inventory up 13.3% YoY on Aug 11th

by Bill McBride on 8/11/2014 04:34:00 PM

Here is another weekly update on housing inventory ...

There is a clear seasonal pattern for inventory, with the low point for inventory in late December or early January, and then usually peaking in mid-to-late summer.

The Realtor (NAR) data is monthly and released with a lag (the most recent data released was for June and indicated inventory was up 6.5% year-over-year).  

Fortunately Ben at Housing Tracker (Department of Numbers) has provided me some weekly inventory data, for 54 metro areas, for the last several years.

Existing Home Sales Weekly data Click on graph for larger image.

This graph shows the Housing Tracker reported weekly inventory for the 54 metro areas for 2010, 2011, 2012, 2013 and 2014.

In 2011 and 2012, inventory only increased slightly early in the year and then declined significantly through the end of each year.

In 2013 (Blue), inventory increased for most of the year before declining seasonally during the holidays.  

Inventory in 2014 (Red) is now 13.3% above the same week in 2013.

Inventory is also about 3.2% above the same week in 2012.  According to several of the house price indexes, house prices bottomed in early 2012, and low inventories were a key reason for the subsequent price increases.  Now that inventory is back above 2012 levels, I expect house price increases to slow (and possibly decline in some areas).

Existing Home Sales Inventory MonthlyThe second graph is monthly using the NAR data for several selected years.  The steady increase in inventory in 2005 (yellow) helped me call the top of the housing bubble. 

Inventory was high from 2006 through 2010, with the peak year in 2007 (orange on this graph). 

Inventory started declining significantly in 2011 (light blue), and the helped me call the bottom for house prices in February 2012 (see The Housing Bottom is Here).

Now inventory is increasing, although using the NAR monthly data, inventory was still below the level in 2012 for June (6.5% above June 2013).

 Note: One of the key questions for 2014 will be: How much will inventory increase?  My guess was inventory would be up 10% to 15% year-over-year at the end of 2014 based on the NAR report.  Right now it looks like inventory might increase more than I expected.