Housing Inventory – What Does It Mean To You?

There are several numbers that indicate the current condition of the real estate market. The one I consider to be of great importance, and my favorite to monitor, is months of housing inventory.

Inventory is calculated as follows:

Months of Inventory = # of Active Listings / # of Closings (That month, or an average of several months)

The number of months of inventory indicates the following and gives a picture of current supply and demand:

0-3 Months indicates a seller’s market.

4-6 Months indicates a stable market (usually does not last, gets passed through on the way to either a buyer’s or seller’s market).

Over 6 Months indicates a buyer’s market.

What does this mean to you? The last time we looked at this number together, we were looking at July. Here in New Hanover County (Where Wilmington and Wrightsville Beach are located), inventory actually dropped slightly in August, from 1.8 months to 1.7 months, and crept back up to 2.0 months for September. Interest rates may be affecting buyer demand to a certain degree, but until inventory increases, we may continue to experience a seller’s market, with a competitive arena for buyers and multiple offer situations.