In a recent post we talked about how for-sale inventory levels are much lower in many markets nationwide than they were last year. When we did this analysis in February we had already started to see signs that inventory constraints were easing in some markets. While inventory levels of for-sale properties are still lower than they were last year, we continue to see inventory constraints relaxing, especially in some markets, when looking at year-over-year levels on April 24 compared with April 10.
In the United States, as a whole, inventory is still down by 14.4% compared to April 24 of last year, but tightness has eased when looking at the year-over-year change on April 10. On April 10, inventory was down 15%. With these numbers we can say that inventory constraints have eased 0.6 percentage points (15-14.4) nationally, or alternately, inventory has increased by 0.6 percentage points controlling for seasonality. Of the 99 metropolitan areas studied, 58 are showing easing when comparing the two year-over-year metrics of April 10 and April 24. The top one-third of the market, in particular, is showing the largest degree of inventory easing, though this is very market dependent. In Atlanta and Seattle, for example, the top tier is easing the most, but in San Jose and Orlando the bottom tier is currently easing to the greatest degree. In Washington, DC, both the bottom and the middle tiers are showing strong inventory easing.
This easing in inventory will be key in explaining home value movements in the coming months. We just released our 2013 Q1 Real Estate Market Reports, in which we describe the tapering off of home value appreciation in many markets, with some markets already experiencing depreciation. Additional inventory will feed this trend so that more home value depreciation or slower appreciation will be on the horizon for many markets, including Washington, Boston, St. Louis, New York and Philadelphia.
The graphic below shows our most recent inventory numbers and the extent of the relaxation in inventory constraints.