Let’s talk inventory here. RMLS calculates inventory by talking the number of available listings at a fixed point and dividing by the current rate of closed sales: if there were 100 homes on the market and they are selling at a rate of ten a month, there is ten months of inventory. Inventory for March was 3.8 months.
Inventory spiked in January at 6.2 months and declined to 5.2 months in February. March’s 3.8 almost matches Jan. ’05 and July ’06 levels. Inventory bottomed out at in June ’05 and was under 2.0 between March ’05 and September ’05.
Looking back at the previous years, inventory drops through the spring, bottoms out in the summer and increases during the fall and winter months. Inventory is used a lot as an indicator of determining a buyers or seller market. It looks as though we spent the winter in more of a buyer’s market but may trend back towards (though not as extreme) seller’s market. Looking at the past to predict the future may not be the best investment strategy.