Housing Inventory
On the Shupe Carboni Data Page, we track Single Family Housing Permits and Housing Inventory by state. When I first learned about the Housing Inventory metric last year, I wasn’t sure exactly what it meant. We all work with product inventory every day. Inventory is the total product stocked in the warehouse, and when orders are placed with vendors, more product is made and shipped.
Housing inventory is different.
What is Housing Inventory?
You may be tempted, as I was, to assume that housing inventory is directly tied to the number of new units builders are building. While that’s part of the equation, it’s not the whole story. According to Meredith Dunn at the National Association of Realtors (NAR), “[Housing] inventory is calculated monthly by taking a count of the number of active listings and pending sales on the last day of the month.”1 Real Estate sales are a dynamic process affected not only by interest rates at a high level but also by the dynamics of the sales process itself. Homes can move back and forth between pending (when the seller has accepted an offer but the sale is not final) and active status (the seller is seeking a buyer). Plus, homes are frequently resold or flipped.
Builders contribute to inventory levels by constructing new homes, but the activity level of the housing market is also heavily influenced by homeowners deciding to sell their houses.
Joseph Carboni
Marketing, Operations & Technology Manager
Shupe Carboni & Associates