August 2016 Housing Data Submitted by Rich Toscano on September 24, 2016 - 12:19pm











...which is interesting in light of a decrease in months of inventory:







This is the opposite of the usual relationship between the two, as shown in the below graph (with months of inventory inverted), in which lower inventory tends to correspond to higher price increases and vice-versa. The recent divergence from that pattern is pretty unusual:







Prices do tend to flatten out near the end of the year regardless of supply considerations -- witness Dec 2012-Jan 2013 when prices flattened and then went negative despite a lack of supply on par with what we're seeing now. However, we are talking about August data here, so it seems a bit early for that to be the explanation.



I'd expect the two lines to converge again over time, which implies one of two outcomes (or, I suppose a combination of both):

Prices start to increase again

Months of inventory increases (driving the inverted blue line down), which in turn would result from some combination of reduced demand and increased inventory on the market

It's also possible that this relationship has broken down, but it's worked pretty well over time, and it makes sense that it should work: fewer months of inventory means some combination of more demand/less supply, which should correspond to upward pressure on prices. (And the other way around).



We'll see what happens. More graphs to ponder below.



























































Prices have leveled off in the last couple of months......which is interesting in light of ain months of inventory:This is the opposite of the usual relationship between the two, as shown in the below graph (with months of inventory inverted), in which lower inventory tends to correspond to higher price increases and vice-versa. The recent divergence from that pattern is pretty unusual:Prices do tend to flatten out near the end of the year regardless of supply considerations -- witness Dec 2012-Jan 2013 when prices flattened and then went negative despite a lack of supply on par with what we're seeing now. However, we are talking about August data here, so it seems a bit early for that to be the explanation.I'd expect the two lines to converge again over time, which implies one of two outcomes (or, I suppose a combination of both):It's also possible that this relationship has broken down, but it's worked pretty well over time, and it makes sense that it should work: fewer months of inventory means some combination of more demand/less supply, whichcorrespond to upward pressure on prices. (And the other way around).We'll see what happens. More graphs to ponder below. (category: )