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This metric is very simply calculated by dividing the number of homes for sale by the number of homes sold during a given month. The resulting figure gives us a rough but decent-enough idea of where things stand as far as short-term supply and demand are concerned.
The chart shows that supply has risen substantially compared to demand in recent months. As it stands, the number of months’ worth of available inventory is more than double what it was at this time last year.
Conventional wisdom has it that a housing market with over 6 months of inventory is considered a “buyer’s market,” for what little insight that provides.
– RICH TOSCANO