Months supply of inventory is one of the most commonly cited measurements used to describe the housing market. But what is it? In simple terms, it’s how long it would take to sell all of the houses currently on the market – if no new listings were added. It not only measures inventory (the number of homes available), but also how active buyers are in the market.
A six months supply is considered balanced. Anything more indicates a buyer’s market, meaning buyers may have more leverage thanks to increased inventory. Anything less indicates a seller’s market, which swings in favor of sellers because of lower inventory and higher competition.
But real estate is complex, and the numbers don’t always paint the full picture. Even in areas where there are fewer homes on the market to choose from, seasonal price drops may help buyers score a deal. RE/MAX spoke to real estate pros in four markets around the country about the trends they’re seeing this fall.
Months supply of inventory: 2.8
Median Sales Price: $173,000
“Active listings are down 26.7 percent compared to last year, meaning inventory is very low right now,” says Lori Oller, Co-Broker/Owner of RE/MAX Results in Tulsa, which operates four offices in Northeastern Oklahoma.
Co-Owner Amy Whitmarsh points out that despite the low inventory, there’s good news for both buyers and sellers this month. “A low inventory market may favor sellers, but there are still great homes available on the market,” she says. “Plus, with a median sales price of $173,000, Tulsa remains one of the most affordable markets in the country.”
Dan Oller, Owner of Motto Mortgage Impact in Owasso and Lori’s husband, says interest rates are another important consideration for Tulsa buyers this season. “This fall is a great time to consider purchasing with interest rates low and expected to continue to drop. It could mean a lower monthly mortgage payment over time.”
Months supply of inventory: 4.1
Median sales price: $605,000
A finite amount of land and anti-development regulations intended to protect the environment make inventory a continuous struggle for homebuyers in Honolulu, says John Harris, Broker/Owner of RE/MAX Honolulu.
“The culprit that contributes most to our supply issues here on Oahu is that the prohibitive cost of property development prevents us from even keeping up with population growth,” Harris says. “Yet the very impediments that slow down new development in Hawaii actually saved the island of Oahu, which is less dependent on resort properties than neighboring islands, the last time we had a housing bubble in the United States.”
For buyers considering an investment property, Harris says to keep Honolulu in mind. “If one has the temperament to tolerate the aforementioned challenging characteristics, Honolulu might be an excellent place to purchase a home or add to one’s global portfolio.”
Months supply of inventory: 4.5
Median Sales Price: $231,950
Months supply of inventory jumped month-over-month in this Lone Star city, up to 4.5 months from 3.4 in August. As a result of the move toward a buyer’s market, the median sales price dropped slightly, down 0.5%. This is a far smaller drop than the national rate of -2.5%.
“San Antonio continues to outpace national home trends, reporting a 3.2 percent increase in sales year-over-year,” says Bob Jacobs, Broker/Owner of RE/MAX Associates in San Antonio.
“The real estate market is definitely tied to the expansion of the local economy. People continue to move here for school, military service and many other industries.”
Months supply of inventory: 5.5
Median Sales Price: $240,000
“Chicago is seeing buyers have the power once again,” says Mike Opyd, Managing Broker/Owner of RE/MAX Next in Chicago. “A large increase in the number of properties available means buyers finally are able to take their time and see a large amount of inventory before having to make an offer. They are getting more of what they want now instead of settling.”
The increased inventory means sellers are pricing their properties more competitively,” Opyd adds. “I anticipate this fall and winter being one of the best buyers markets we have seen.”
What does it all mean?
With fall in full swing, many metros are still in a seller’s market with no signs of slowing down just yet. Still, buyers have several advantages. Months supply of inventory, while not yet balanced, is still increasing in several areas. And many parts of the country are seeing seasonal price drops.
“The market still poses some challenges for buyers – framed by rising prices and shrinking inventory – but we’re moving into the fourth quarter on much better footing than we had a year ago,” says Adam Contos, RE/MAX CEO.
Learn more about real estate trends across the country in the RE/MAX September National Housing Report.