If inventory does bottom, we probably will not know for sure until late in the year. In normal times, there is a clear seasonal pattern for inventory, with the low point for inventory in late December or early January, and then peaking in mid-to-late summer.
The NAR data is monthly and released with a lag. However Ben at Housing Tracker (Department of Numbers) kindly sent me some weekly inventory data for the last several years. This is displayed on the graph below as a percentage change from the first week of the year.
In 2010 (blue), inventory followed the normal seasonal pattern, however in 2011 and 2012, there was only a small increase in inventory early in the year, followed by a sharp decline for the rest of the year.
So far - through late February - it appears inventory is increasing at a sluggish rate.
Click on graph for larger image.Note: the data is a little weird for early 2011 (spikes down briefly).
The key will be to see how much inventory increases over the next few months. In 2010, inventory was up 8% by early March, and up 15% by the end of March.
For 2011 and 2012, inventory only increased about 5% at the peak.
So far in 2013, inventory is up 3.6%. If inventory doesn't increase more soon, then the bottom for inventory might not be until 2014.