House Pricing Is Still About Supply And Demand

Knowing how much inventory is for sale is crucial to determining where home values are headed.  Pricing of any item is determined by supply and demand:  how many items are available in relationship to how many want to buy that item.  The reason for the strong year-over-year home appreciation numbers we have been seeing is simple to explain:  demand for housing is up and the supply of homes for sale has been at all time lows.  But that is beginning to change.

Total housing inventory is again approaching historic norms of a 5 month supply compared with 4.3 months in January.  And it seems inventory will continue to increase as we move forward.

Realtor.com released their National Housing Trend Report, which looked at the movement in inventory levels of homes for sale across the country.  Here are two major findings of the report:

1) Dramatic year-over-year inventory declines have evaporated.
Nationally inventories are only about 6% below the level of a year ago compared to being down 16.47% year-over-year in January.

2) Inventory declines decrease in local markets.
The number of markets with decreases in year-over-year inventory has declined.  This suggests that fall inventories in some markets may return to levels of a year ago.
Don't get carried away with recent news headlines when pricing your home.  Let your real estate professional explain what this information means to the current value of your house.