- The Washington Times - Thursday, March 29, 2007

The number of homes coming on the market fell significantly in February, which helped keep a slow sales month from being a complete washout.

Just 10,710 homes were listed with area Realtors in February, down from January’s 12,429. The cold, snowy weather we had in February surely had a lot to do with this, but because the weather also slowed demand, that drop in supply kept the market on an even keel.

What I’m trying to say is that whether you were buying or selling in February, the difficulty was about the same as it was in January. I base this on sales-chance figures, which were 21 percent in January and 20 percent in February.

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.

Notice that I am using the term inventory. The inventory is different from listings in that the inventory counts the number of homes available for purchase on a single day. It’s a measure of available supply — as opposed to listings, which tell us how much supply is coming onto the market.

Now, if the number of listings truly was down because of the weather, we could expect a surge in listings in March. We’ll have that data soon, but the other important question will be whether sales surge as much as listings. If so, the market will remain about as competitive as it was in February, despite the rising numbers.

If, however, buyers show up in fewer numbers than the sellers, then the market will cool. And the reverse…. Well, you can see how it works.

I’m not predicting which will happen. I’m just trying to clarify how listings, inventory and sales figures are interrelated. As these figures rise and fall, they affect the market climate. And that ultimately has an effect on home prices, which we will discuss next week.

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

The statistics in this story reflect a metropolitan area that includes the Maryland counties of Montgomery, Prince George’s, Anne Arundel, Howard, Charles and Frederick; the Virginia counties of Arlington, Fairfax, Loudoun, Prince William, Spotsylvania and Stafford; the city of Alexandria; and the District.

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