Inventory continued to move lower after peaking over the summer as part of the normal seasonal build, falling for the fifth straight month to 970,000. This is a 13.4% decline from November and the equivalent of a 2.9 months’ supply.
But inventory is even tighter than that figure implies, as there were only 690,000 “active listings” in December, meaning that 29% of the “inventory” in the Existing Home Sales report is under contract and not truly available. This data speaks to ongoing demand for homes, even with the decline in sales, as a normal market has 25% of inventory under contract.
Demand can also be seen in the pace of sales, as homes are still selling quickly when priced correctly. Average days on the market increased slightly from 24 days in November to 26 days in December, while 57% of homes sold last month were on the market for less than a month.
Looking at the data as a whole, low inventory and ongoing housing demand will continue to limit the downside in home prices.
The data from the Existing Home Sales report indicates that the housing market is still strong despite the decline in sales. Inventory continues to move lower, with only 690,000 “active listings” in December, and homes are selling quickly when priced correctly. This suggests that low inventory and ongoing demand will help to limit the downside in home prices. With the right home and pricing strategy, it looks like the housing market will remain stable in the near future.