by Calculated Risk on 3/19/2019 10:42:00 AM
Tuesday, March 19, 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 4.6% year-over-year (YoY) in January, this was the sixth 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, Las Vegas, and Sacramento (through February) and Phoenix, and total existing home inventory as reported by the NAR (through January). (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 105% YoY in Las Vegas in February (red), the eight 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 17% year-over-year in Houston in February.
Inventory is a key for the housing market. I expect a further increase in inventory in 2019, but overall I think inventory will still be fairly low.
Also note that inventory in Seattle was up 164% year-over-year in February (not graphed)!