Supply and demand drives our economy and determines prices for goods and services. This is especially true in the housing market.
Often, you will hear the housing market categorized as a buyers' market (more houses for sale than demand) or a sellers' market (more buyers than houses for sale). This categorization or type of housing market is determined by looking at the months' supply. Months supply is the ratio of inventory available for sale at the seasonal sales pace in a given month. This figure is calculated by dividing the number of homes for sale by the number of homes sold that month.
According to the National Association of Realtors ® (NAR), the September national months' supply was 7.8 months, down from 9.3 months in August. This means that, at the current rate of sales and available inventory, it would take about 7 months to sell all the homes currently available for sale.
Lawrence Yun, chief economist for the NAR stated, "The current housing supply is the lowest we've seen in two and a half years. If we could continue to absorb inventory at this pace, home prices would return to normal and we'll see modest appreciation patterns next year."
While the national months supply is an average, housing market conditions can vary by region, area, neighborhood and price. For instance, homes under $250,000 are in greater demand because of first-time homebuyers in the marketplace, and therefore have a shorter months' supply. On the opposite end of the scale, the market for homes priced at $1 million and above is virtually frozen at 21 months' supply.
For a true housing market study of your area, ask your Allen Tate Realtor, Michele, for a competitive market analysis (704) 201-4602.
