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, Phoenix and Sacramento (all through April), and also total existing home inventory as reported by the NAR (through March 2018).
Note: For Phoenix, there was a discrepancy between the "Market Report" and the "Stats Report". For this graph, I'm using the Stats Report.
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 in Sacramento was up 18% year-over-year in April (inventory was still very low), and has increased year-over-year for seven consecutive months.
Also note the inventory is still down 19.5% in Las Vegas (red), but the YoY decline has been getting smaller - and it is very possible that inventory will up year-over-year in Las Vegas later this year.
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. It appears the inventory decline might be ending in some markets.