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National Supply of Homes For Sale rises to 6.8 months in January 2016

Some Markets Show Impacts of Low Oil Prices in Their Months of Supply

Shu Chen    |    Housing Trends

As the U.S. housing market strengthened last year the inventory of homes for sale fell to a post-housing-crisis low. So how is the inventory shaping up early this year? Nationally, the number of homes for-sale equated to a 6.8-month supply[1] in January 2016, up from a 6.5-month supply in January 2015.

Figure 1 breaks out the month supply into four price tiers: low price (0-75 percent of the median list price), low-to-middle price (75-100 percent of the median list price), middle-to-moderate price (100-125 percent of the median list price) and high price (125 percent or more of the median list price). Usually the high-price tier has the largest supply and the low-to–middle price tier has the lowest supply. The differences in the months of supply among the four price tiers were greatest during 2007-2009 crisis period, when the high price tier peaked at 21.2 months while the other tiers remained under 15 months.

sold in 30 days

sold in 30 days

Here’s how each price tier’s months of supply in January 2016 compares with history:

  • The low-price tier had a 7.2-month supply in January, up from 6.8 months in January 2015 and about half of its peak in January 2008.
  • The low-to–middle price tier had a 5.9-month supply in January, down from 6.2 months in January 2015. The January supply was about 60 percent lower than its January 2009 peak.
  • The middle-to–moderate price tier had a 6.2-month supply in January, down from 6.5 months in January 2015. The January supply was about 60 percent lower than its January 2008 peak.
  • The high-price tier had a 9.3-month supply in January, which was a month more than it was in January 2015. The January supply was less than half of its January 2009 peak and almost double its June 2000 trough.

Inventory on Market

Inventory on Market

With demand strong and supply tight, many homes didn’t spend long on the market in 2015. But trends are starting to change now. Figure 2 shows that over the past two years the share of homes selling within 30 days of the initial list date[2] has been at the highest level since 2000. In January 2016, the share selling within 30 days was 16.3 percent, which was almost as high as the 2015 peak and was significantly higher than the pre-crisis peak of 14 percent in October 2005, as well as about twice the April 2011 trough. Figure 3 shows the share of the for-sale inventory that was on the market for more than 180 days. In January 2016, that share was 23.1 percent, which was up from the 2015 average of 22.4 percent but still down from the June 2009 peak of 32.1 percent.

US and CBS Months Supply

US and CBS Months Supply

Figure 4 shows the months of supply in the U.S. (based on data for 66 CBSAs) and selected CBSAs in January 2015 and January 2016. Nationwide, the inventory didn’t change much over the past year, with the supply at 6.8 months in January 2016 compared with 6.5 months in January 2015. However, some oil markets were impacted by low oil prices. The supply in Houma, La., and Oklahoma City, Okla., increased 2.5 and 1.3 months respectively in January 2016 compared to a year earlier. The months of supply in the Houston metro area increased from 5.9 months in January 2015 to 7.1 months in January 2016. Denver and San Francisco had the lowest months of supplies of 1.7 months and 2.6 months, respectively.

1 The months of supply, or months of inventory, is calculated as the ratio of the for-sale inventory at the end of the month to the number of homes sold during the same month, and represents the number or months it would take to sell the inventory at that month’s sales pace. The U.S. statistics are based on data for 66 Core Based Statistical Areas (CBSAs). To determine the price tier, the median list price was the median of homes listed in the 66 CBSAs for the given month.

2 Figures 2 and 3 show a rolling 12 month average.

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