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The supply of homes available for sale has been unusually low in comparison to demand this year, at least by recent standards. That trend became even more pronounced last month.

The number of months’ worth of San Diego housing inventory dropped to just over 4 months in June. As the accompanying graph shows, this is quite low in comparison to anything we’ve seen in recent years.

But the supply of homes for sale is even lower than it looks in the graph. A snapshot taken in mid-June showed that nearly 27 percent of actively listed inventory was illusory “contingent” inventory that was no longer actually for sale, a phenomenon described here a couple weeks back. If contingent inventory is thrown out of the calculation, there was closer to 3 months’ worth of inventory on the market in June.

One can only assume that the tightness of housing supply in comparison to demand has played a big part in the recent home price rally.


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