Find your city and apply this definition. Great explanation...let me know if you have any questions.
Days Inventory indicates how many days it would take to sell all the Active Listings if they were to sell at the rate implied by Annual Sales and assuming no new listings became active. It equals Days in Last Year x Active Listings / Annual Sales.
I like to think about it as 'the pace of activity'. It's predictive power is that as the pace of activity picks up (in lower days inventory) it means demand is greater than supply, which, if the trend continues, must translate into higher prices. Note: Mike Orr (Cromford Report) says Days of Inventory is a better measure than the more commonly used # of Month Supply. This is because Days Inventory is less volatile, as for example, when there is an atypical 1 month surge in high-end sales (as we saw last June).
We Can look at how days of inventory had changed over the last 12 months by price range. Days of inventory is one of the most revealing measurements for predicting the future direction of the market. It is a leading indicator for future price movements. When it goes down, prices tend to move upwards, although the effect can be delayed by up to 18 months. Now let us take a look at the same measurement by geography for single family homes.
| City | Days of Inventory 3/1/13 | Days of Inventory 3/1/12 | % Change |
| Anthem | 80 | 118 | -32% |
| Apache Junction | 85 | 74 | +15% |
| Arizona City | 134 | 71 | +89% |
| Avondale | 50 | 54 | -7% |
| Buckeye | 93 | 74 | +26% |
| Carefree | 403 | 404 | 0% |
| Casa Grande | 121 | 79 | +53% |
| Cave Creek | 111 | 141 | -21% |
| Chandler | 56 | 69 | -19% |
| Coolidge | 122 | 81 | +51% |
| Desert Hills | 69 | 183 | -62% |
| El Mirage | 55 | 42 | +31% |
| Eloy | 218 | 230 | -5% |
| Florence | 146 | 107 | +36% |
| Fountain Hills | 161 | 175 | -8% |
| Gilbert | 56 | 65 | -14% |
| Glendale | 48 | 56 | -14% |
| Gold Canyon | 214 | 202 | +6% |
| Goodyear | 97 | 94 | +3% |
| Laveen | 56 | 53 | +6% |
| Litchfield Park | 113 | 75 | +51% |
| Maricopa | 105 | 54 | +94% |
| Mesa | 66 | 67 | -1% |
| New River | 114 | 80 | +43% |
| Paradise Valley | 389 | 403 | -5% |
| Peoria | 61 | 73 | -16% |
| Phoenix | 62 | 61 | +2% |
| Queen Creek | 86 | 57 | +51% |
| Rio Verde | 444 | 719 | -38% |
| Scottsdale | 131 | 155 | -15% |
| Sun City | 115 | 117 | +2% |
| Sun City West | 117 | 174 | -33% |
| Sun Lakes | 133 | 192 | -31% |
| Surprise | 99 | 82 | +21% |
| Tempe | 52 | 65 | -20% |
| Tolleson | 60 | 45 | +33% |
| Tonopah | 119 | 66 | +80% |
| Waddell | 144 | 92 | +57% |
| Wickenburg | 410 | 466 | -12% |
| Wittmann | 168 | 108 | +56% |
| Youngtown | 29 | 21 | +38% |
This table tells us that buyers are having a very hard time in areas like Tempe, Glendale, Phoenix, Chandler, Peoria, Tolleson, Avondale, Gilbert, Youngtown, Mesa, Laveen, Anthem, Desert Hills and El Mirage. Most of these areas are in the more central areas of the conurbation. The pricing pressure is strongly upward in these locations, especially those where the days of inventory is even lower than last year at this time - Tempe, Glendale, Peoria, Chandler, Gilbert, Avondale.
Further out from the center, Maricopa, Queen Creek, Florence, Casa Grande, Arizona City, Buckeye, Surprise, Waddell, Eloy, Goodyear, Wittmann, Litchfield Park, Coolidge, New River, Apache Junction and Tonopah have more supply than last year. Buyers will have a somewhat easier time finding a home if they are prepared to search in these areas, particularly those where inventory has increased sharply from last year such as Maricopa, Arizona City and Casa Grande.
Supply is still adequate in luxury homes areas such as Carefree, Rio Verde, Paradise Valley and Gold Canyon.
The Scottsdale market almost always has higher inventory than the valley average, so a 15% reduction from last year indicates the balance is moving in favor of sellers and prices will rise.
Wickenburg at 410 still has plenty of homes available which explains why there is little upward pricing pressure there.
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