December Housing Supply and Demand
Real estate resale activity staged a decent rebound in December, with combined sales coming in at 8.0 percent above November sales and 7.4 percent below last year's number. This latter figure compares to recent year-over-year declines of 20-25 percent and thus represents a substantial improvement over prior months.
 The supply picture also brightened, as December resale inventory was down 11.6 percent from the prior month. Inventory usually drops during December but this decline was particularly dramatic. Inventory was 19.7 percent higher than it was in December 2005, but this actually represents a much lower year-over-year comparison than we've seen throughout most of 2006.
The end result, as shown in the graph to the right, was a noticeable drop in the number of months' worth of resale inventory.
My guess is that buyers have begun to return to the market due to declining interest rates and to extensive propagandizing at both the local and national levels. As we saw in Monday's entry, though, the pickup in volume hasn't yet exerted any upward pressure on pricing power.
As I mentioned last month, December and January are only marginally informative months. We'll get a clearer read on the state of the market in the near future.
-- RICH TOSCANO
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