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Is the Increase in Inventory a Bullish or Bearish Sign for...

There are those who look at the increase in inventory as a sign that we are returning to the market we saw last decade. However, a closer look shows that we are nowhere near the levels of inventory we reached before the crash in 2008. A normal market would have about 6-months inventory, but the latest Existing Home Sales Report issued by the National Association of Realtors revealed that: “Unsold inventory is at a 4.3-month supply at the current sales pace up from 4.1 months a year ago.” A decade ago, prices began to rapidly depreciate in June 2007. With the current levels of buyer demand, any such increase in months supply is highly unlikely. As Danielle Hale, realtor.com’s Chief Economist explains: “After years of record-breaking inventory declines, September’s almost flat inventory signals a big change in the real estate market. Would-be buyers who had been waiting for a bigger selection of homes for sale may finally see more listings materialize. But don’t expect the level to jump dramatically. Plenty of buyers in the market are scooping up homes as soon as they’re listed, which will keep national increases relatively small for the time being.” What will be the result of the increase in inventory? Again, we quote from the ‘Z Report’: “In our view, the short-term narrative will probably be confusing, but more sustainable growth and affordability will likely be the end result.” Bottom Line If you are either a first-time or second-time buyer who has given up, check with a local real estate professional to see if new listings have come to the market in your area. Members: Sign in now to set up your Personalized Posts & start sharing today!