Probably the simplest and most useful indicator for the housing market is the Days of Inventory. This is the total number of active listings divided by the annual sales rate and multiplied by 365 to convert from years to days. This is not to be confused with the Average Days of Market which is one of the least useful indicators that is widely quoted but imparts little sense of market direction since it is a trailing indicator. Days of Inventory works in reverse (the lower the number the hotter the market) but is a leading indicator that is very useful for those wanting to know the direction of prices over the short term future.
Right now the Days of Inventory for the entire ARMLS database stands at 86. It was lower than this between April 2004 and November 2005 and between March 2012 and September 2012 and also between May and August 2013. However it is currently the lowest since August 2013 and well down from July 2016 when we saw 105.
The long term average is 149 and a figure of 86 confirms we are in a strong seller`s market but not at extreme levels. Between July 2004 and September 2005 we were below 60 which corresponded to the top of the bubble. The sharp increase from 31 in March 2005 to 67 in October was a reliable indication of the bubble popping.
Our favorite chart for Days of Inventory across the entire market is the weekly one (static chart shown below).
But don't forget the one relevant to your situation which will be more accurate by price range. Chart just below as well.
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