Manhattan listing inventory has been sliding for a few years yet sales have remained stable?playing havoc with the monthly absorption rate. The absorption rate used here is the number of months to sell all active listings at the annualized rate of sales activity. I like it because puts supply and demand into the same metric. I see it as defining the "pace" of the market. It is important to note that there are periods when inventory is rising AND sales are rising and vice versa, so limiting the view to only one of the two metrics tells just half the story.
In this two-fer, I broke out the Manhattan regions (the Uptown data set is too limited to show a reliable trend) by co-op and condo over the past 3+ years. The trends were given context by placing the 10-year average and the 10-year low (red dotted lines).
The pace of absorption is clearly getting faster, reflected by the falling rate. It is approaching decade lows. In other words, the sharp decline in listing inventory and stable sales levels has run its course long enough (3 years) to create a faster-paced market.
Look out for 2013. We may see some modest price appreciation if this keeps up?not because the market/economy is fundamentally better, but because tight credit policy is keeping sellers from becoming buyers.