Realtor.com Weekly Inventory Up 40% Year-over-year; Now Above Same Week in 2020

As I noted some time ago, Inventory will Tell the Tale about the housing market. Housing inventory is still historically low, but increasing, and the pace of growth has picked up recently.

We need to watch inventory very closely. This will give us a hint on what will happen with house prices, although prices are already falling even with fairly low levels of inventory.

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 (happened in October) ✅

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 weekly report from Chief Economist Danielle Hale: Weekly Housing Trends View — Data Week Ending Oct 29, 2022.

• Active inventory continued to grow, increasing 40% above one year ago. This is the third week of a more notable step up in inventory gains after rough stability since July. …

• New listings–a measure of sellers putting homes up for sale–were again down, dropping 13% from one year ago. This marks the seventeenth week of year over year declines in the number of new listings coming up for sale.

Here is a graph of the year-over-year change in inventory according to realtor.com. Note that inventory growth slowed over the summer as new listings fell but is increasing again as sales declined sharply recently with higher mortgage rates.

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 in October was above the level in October 2020. (October 2022 is for mid-October, and inventory has increased further over the last two weeks).

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 active monthly data to the inventory data from the National Association of Realtors (NAR). The dashed line is Realtor.com’s estimate of total inventory including pendings.

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, and the pace of growth has picked up again in recent weeks.