Housing Inventory Has Bottomed

Altos Research reports inventory up 2.4% last week

Tracking existing home inventory is very important in 2022.

Inventory usually declines in the winter, and then increases in the spring.  Inventory bottomed seasonally at the beginning of March 2022 and is now up 5.1% since then.

This inventory graph is courtesy of Altos Research.

As of March 25th, inventory was at 253 thousand (7-day average), compared to 248 thousand the prior week. Inventory was UP 2.4% from the previous week.

Last year inventory bottomed seasonally in April 2021 - very late in the year. This year, by this measure, inventory bottomed seasonally at the beginning of March.

Inventory is still very low. Compared to the same week in 2021, inventory is down 19.0%, and compared to the same week in 2020, and inventory is down 66.1% from 747 thousand.

One of the keys will be to watch the year-over-year change each week to see if the declines are decreasing. Here is a table of the year-over-year change by week since the beginning of the year. 

Now we need to watch if the YoY change continues to decrease. Based on the current trend, it is possible inventory will be up YoY sometime in the second half of 2022.

Altos Research CEO Mike Simonsen discusses this data regularly on Youtube.

National Association of Realtors® (NAR) Inventory

According to the NAR’s February report:

Total housing inventory at the end of February totaled 870,000 units, up 2.4% from January and down 15.5% from one year ago (1.03 million). Unsold inventory sits at a 1.7-month supply at the current sales pace, up from the record-low supply in January of 1.6 months and down from 2.0 months in February 2021.

This graph shows the year-over-year (YoY) change in NAR reported existing home inventory and months-of-supply. Since inventory is not seasonally adjusted, it really helps to look at the YoY change. Note: Months-of-supply is based on the seasonally adjusted sales and not seasonally adjusted inventory.

According to the NAR, inventory is very low and was down 15.5% year-over-year (YoY) in February. But the NAR also reports that inventory has bottomed.

It is likely that housing inventory bottomed for all time in early 2022.