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Three Cents Worth: Price Momentum Wanes, Listing Hiccup Reigns

[This week, graphic artist Jonathan Miller digs into inventory levels, comparing sales and listings to get a feel for momentum. Click on the image to exand.]

This week I took a look at inventory levels, but wanted to do more than recap the total listings available. I wanted to see if there were any changes in momentum. I matched up the number of sales against the number of listings. It's not a perfect match since closed sales are about 45 days behind due to differences in contract and closing dates.

The net gain or loss in inventory levels was calculated by measuring the change in listing inventory less the change in the number of sales, as compared to the prior quarter. That way, the change in inventory could be compared to the change in quarterly median sales price. I looked at the change in median sales price from the prior year quarter rather than from the prior quarter to account for seasonal changes.

It's no surprise that price appreciation has been declining from its record pace in 2004 and 2005. What was a surprise was the net loss in inventory this quarter, the first time this happened since the end of 2004. Even though actual inventory levels are at near-term record highs, the pace of new inventory entering the market did not keep pace with the number of sales, but there was enough to eat away a very small amount of the inventory overhang.

I don't think this means a reverse of this year's price trends, and it may simply be some sort of inventory hiccup. Best case, I think we'd have to see another year of net inventory losses to begin to reverse the recent trend of diminishing appreciation, flat or even declining prices in some markets before we could get excited. We'll see.
· Listings v. Sales Price [Miller Samuel]