Will Housing Inventory Follow the Normal Seasonal Pattern?

Altos Research Reports Inventory Up 30.5% Year-over-year

The next couple of months will be important for housing inventory. Will inventory follow the normal seasonal pattern and peak in the summer? Or will inventory peak later in the year (like October or November)?

My current outlook on house prices assumes that inventory will continue to increase into the Fall.

This morning Altos Research released inventory data as of July 25th. Inventory was at 526 thousand (7-day average); 20% above the peak in 2021 of 437 thousand on September 3rd.

Here is a graph of inventory from Altos.

The second graph uses the Altos inventory data and shows the trend comparing to the same week in 2020 and 2019. The dotted red line is the recent trend compared to 2020 - and at the current pace, inventory will be up compared to 2020 in late August. The dashed grey line is comparing to 2019, and based on the current trend, it is possible inventory will be back to 2019 levels by the beginning of 2023.

Two years ago (in 2020) inventory was declining all year, so it is pretty clear that inventory will be up soon compared to 2020. However, for inventory to reach 2019 levels, inventory will have to increase into the Fall.

The following graph from Altos shows the percentage of homes on the market with prices decreases. About 35% of homes on the market have had a price decrease, and this is probably a leading indicator of slowing price growth.

I’ll have updates on house prices and new home sales tomorrow.