Charting the market: Falling inventory a good sign

Despite unemployment woes and an economy that is still struggling, the Washington-area housing market continues to be active. Sales chances are high, prices are stable and buyers are busy - especially in Virginia, the District and nearby Maryland counties.

Even this autumn, when the market typically slows down, buyers are keeping things humming.

Notice the inventory and sales lines on today’s fever chart. See how the sales line has remained flat while inventory has fallen? That combination is unusual for the fall, and it is because buyers are being motivated by the low interest rates, low home prices and the federal tax credits that are available.

Sales chances reached 24 percent last month - as high as they were in the busy spring months earlier this year.

Sales chances are calculated by dividing a month’s sales figures by the inventory on the last day of the month, resulting in a percentage. A figure below 20 percent indicates a buyer’s market. Higher figures mean we’re in a balanced market or a seller’s market.

Although we’ve been in a buyer’s market for years, factors frequently favor sellers these days. Homes are selling faster than they have in years. The homes sold in October spent less time on the market than we’ve seen at any point in the past four years.

Of course, all of this activity at a time when the market should be cooling down for the winter might mean the market will slow significantly when the incentives are gone. If interest rates rise at the same time the tax credits expire next year, we could see a slow summer and fall.

Contact Chris Sicks by e-mail (csicks@gmail.com).