And the decrease in inventory eventually helped me correctly call the bottom for house prices in early 2012, see: The Housing Bottom is Here.
And in 2015, it appeared the inventory build in several markets was ending, and that boosted price increases.
I don't have a crystal ball, but watching inventory helps understand the housing market.
The graph below shows the year-over-year change for non-contingent inventory in Las Vegas through January 2018, Phoenix and Sacramento, and also total existing home inventory as reported by the NAR (through January 2018).
Click on graph for larger image.This shows the year-over-year change in inventory for Phoenix, Sacramento, and Las Vegas. The black line if the year-over-year change in inventory as reported by the NAR.
Note that inventory is Sacramento was up 15% year-over-year in January (still very low), and has increased year-over-year for four consecutive months. However inventory is down Nationally, and down in Phoenix and Las Vegas.
I'll try to add a few other markets.
Inventory is a key for the housing market, and I will be watching inventory for the impact of the new tax law and higher mortgage rates on housing.