There is a clear seasonal pattern for inventory, with the low point for inventory in late December or early January, and then peaking in mid-to-late summer.
The Realtor (NAR) data is monthly and released with a lag (the most recent data was for April). However Ben at Housing Tracker (Department of Numbers) has provided me some weekly inventory data for the last several years. This is displayed on the graph below as a percentage change from the first week of the year (to normalize the data).
In 2010 (blue), inventory increased more than the normal seasonal pattern, and finished the year up 7%. However in 2011 and 2012, there was only a small increase in inventory early in the year, followed by a sharp decline for the rest of the year.
Click on graph for larger image.Note: the data is a little weird for early 2011 (spikes down briefly).
So far in 2013, inventory is up 16.4%. This is well above the peak percentage increases for 2011 and 2012 and suggests to me that inventory is near the bottom. It now seems likely - at least by this measure - that inventory bottomed early this year (it could still happen early next year).
It is important to remember that inventory is still very low, and is down 15.5% from the same week last year according to Housing Tracker. Once inventory starts to increase (more than seasonal), buyer urgency will wane, and I expect price increases to slow.
This graph shows the NAR estimate of existing home inventory through April (left axis) and the HousingTracker data for the 54 metro areas through late May. Since the NAR released their revisions for sales and inventory in 2011, the NAR and HousingTracker inventory numbers have tracked pretty well.
The third graph shows the year-over-year change in inventory for both the NAR and HousingTracker.
The year-over-year declines will probably continue to get smaller all year.Right now I think inventory bottomed early this year, and, if correct, the year-over-year change will be zero late this year (or early in 2014).
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