Realtor.com Reports Weekly Inventory Up 28% Year-over-year

Inventory growth is slowing

As I noted earlier, Inventory will Tell the Tale about the housing market. And housing inventory is increasing, but the pace of growth has slowed in recent weeks.

As the housing market slows, we need to watch inventory very closely. This will give us a hint on what will happen with house prices.

And not just the monthly existing home sales report from the National Association of Realtors (NAR) and the monthly new home sales report from the Census Bureau. I also track inventory and sales for 35+ local markets each month. And I post weekly inventory data from Altos Research on calculatedriskblog.com.

Here are the inventory milestones I’m watching for:

1. The seasonal bottom. ✅

2. Inventory up year-over-year✅

3. Inventory up compared to same week two years ago (will happen in September)

4. Inventory up compared to same week in 2019.

Realtor.com Weekly Inventory Data

Realtor.com has monthly and weekly data on the existing homes. Here is their most recent weekly report released yesterday from Chief Economist Danielle Hale: Weekly Housing Trends View — Data Week Ending Aug 6, 2022. They have data on list prices, new listing and more, but this focus is on inventory.

• Active inventory continued to grow, but the pace slipped to 28% above one year ago.  The rate of improvement actually slipped this week as the number of new listings continues to come in lower. The big positive for today’s shoppers is that they have more homes to consider than last year’s shoppers did. Nevertheless, our July Housing Trends Report showed that the active listings count still trails its 2020 and 2019 levels by more than 15% and 45%, respectively. More improvement in active inventory is likely needed to bring balance, but the recent trend may be at-risk if homeowner attitudes toward selling now continue to deteriorate.

Here is a graph of the year-over-year change in inventory according to realtor.com.

And here is a monthly graph from Realtor.com released yesterday that shows their estimate of active inventory over the last six years. Note that inventory was declining rapidly for most of 2020, and it is very likely that inventory will be up compared to 2020 in Q3. (July 2022 is for mid-July, and inventory has increased further over the last two weeks).

Inventory is above last year at this time and will be above 2020 by September. However, inventory is still well below the pre-pandemic years.

Comparing Realtor.com Monthly data to the NAR

Here is a graph comparing the year-over-year change in the Realtor.com monthly data to the inventory data from the National Association of Realtors (NAR).

It appears the NAR includes some pending sales in their inventory data, and that accounts for the divergence in the year-over-year change over the last 2 years.

Housing economist Tom Lawler noted this in early 2021:

"As I’ve noted before, the inventory measure in most publicly-released local realtor/MLS reports excludes listings with pending contracts, but that is not the case for many of the reports sent to the NAR (referred to as the “NAR Report!”), Since the middle of last Spring inventory measures excluding pending listings have fallen much more sharply than inventory measures including such listings, and this latter inventory measure understates the decline in the effective inventory of homes for sale over the last several months."

The divergence between the NAR and other measures will probably disappear as the housing market slows.

The bottom line is inventory is still low, increasing, but the pace of growth has slowed in recent weeks.

Personal note: Please share with your friends and colleagues - and suggest they subscribe! Thanks, Bill.