There are many ways to gauge the housing market. You can follow home prices, mortgage rates, home buyer traffic and sales, new home construction or access to credit. If you’re a potential homebuyer or seller, inventory is perhaps the best indicator of the housing market. That’s because it’s an easy way to determine if the market favors buyers or sellers.
When there are too few homes for sale, home buyers have to compete for available homes, which leads to higher home prices. When there are too many homes for sale, the pressure is on the sellers, who have to make sure their home is attractively priced. Typically, inventory is measured by how long it would take to sell the homes currently for sale. A six-month supply is considered a balanced market. In the last few years, inventory has been low.
However, new data from Pro Teck Valuation Services shows a dramatic improvement in housing inventory. The number of metropolitan areas with less than three months of available inventory has fallen to 3.1 percent from 12.6 percent last year. It also found that two-thirds of metros now have between four and eight months of remaining inventory, which is considered healthy. Overall, the numbers indicate that the housing market is far more balanced than it was during last year’s sales season.