by Calculated Risk on 12/18/2018 05:01:00 PM
Tuesday, December 18, 2018
Update: Watching existing home "for sale" inventory is very helpful. As an example, the increase in inventory in late 2005 helped me call the top for housing.
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.
Inventory, on a national basis, was up 2.8% year-over-year (YoY) in October, this was the third consecutive YoY increase, following over three years of YoY declines.
The graph below shows the YoY change for non-contingent inventory in Houston, Las Vegas, and Sacramento (through November), and Phoenix (through October) and total existing home inventory as reported by the NAR (through October, November will be released tomorrow). (I'll be adding more areas).
Click on graph for larger image.
The black line is the year-over-year change in inventory as reported by the NAR.
Note that inventory was up 63% YoY in Las Vegas in November (red), the fifth consecutive month with a YoY increase.
Houston is a special case, and inventory was up for several years due to lower oil prices, but declined YoY recently as oil prices increased. Inventory was up 9% year-over-year in Houston in November. With falling oil prices - along with higher mortgage rates - inventory will probably increase in Houston.
Inventory is a key for the housing market, and I am watching inventory for the impact of the new tax law and higher mortgage rates on housing. At the beginning of 2018, I expected national inventory will be up YoY at the end of 2018 (but still to be somewhat low).
Also note that inventory in Seattle was up 211% year-over-year in November, and Denver up 47% YoY (not graphed)!