by Calculated Risk on 1/14/2019 08:44:00 AM
Monday, January 14, 2019
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 4.2% year-over-year (YoY) in November, this was the fourth consecutive month with a YoY increase, following over three years of YoY declines.
The graph below shows the YoY change for non-contingent inventory in Houston and Las Vegas (through December), and Phoenix and Sacramento (through November) and total existing home inventory as reported by the NAR (through November). (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 82% YoY in Las Vegas in December (red), the sixth 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 13% year-over-year in Houston in December. 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. I expect further increase in inventory in 2019.
Also note that inventory in Seattle was up 272% year-over-year in December, and Denver up 45% YoY (not graphed)!