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Three Cents Worth: Is the Bottom Falling Out of Inventory?

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[This week, real estate appraiser, Curbed graph guru, blogger, and podcaster Jonathan Miller inventories seasonal trends.]

Since the housing headline data theme of our January market report gauntlet in all 16 markets was the severe drop in inventory, I thought I'd break it down further. I looked at the transition from the month of December to January by week over the past four years to demonstrate two patterns: the level of inventory and the seasonality of inventory. Incidentally, the seasonal pattern for the prior 12 years I have the data for is nearly the same as 2010-2012, with the exception of 2008.

2010-2012 seasonal trends continued but the rate of new inventory entering the market continued to slow

For the month of December, inventory tends to slide lower and then begins to rise after the New Year. Nothing new here. Sellers usually wait to list their properties after the holidays in anticipation of an active spring market?the busiest housing market period of the year. For January 2010, 2011, and 2012, that was exactly the pattern, although the amount of inventory returning to the market was falling when comparing the first week of December to the last week of January. January 2010: -2.2%; January 2011: -2.9%; January 2012: -4.9%

2013 Inventory plunged to record (12-year) lows

Not only did the December-to-January 2013 inventory rate fall at nearly 2x the rate of 2012, but inventory also did not rise in January. That will be a big factor in the spring market if we somehow don't see more supply enter in February. Frankly, I can't see any tangible reason for a large uptick in supply, which means upward pressure on prices in 2013.

I've addressed the "what is happening" in all it's chart glory here?if you want the more nuts and bolts on "why this is happening" you can read my "pre-covery" theory here.
· Matrix [matrix.millersamuel.com]
· Three Cents Worth archive [Curbed]