- The Washington Times - Friday, November 26, 2010

October real estate data doesn’t provide a lot of reasons to get excited. Sales were flat, and inventory fell just a little.

The issue we are going to struggle with over the winter is an oversupply of homes for sale. Take a look at the bottom chart, which shows sales and inventory figures for the past three years.

Both sales and inventory rise in every spring because that is the most active time of the year for real estate. The part of the chart I’m checking today is the inventory from June through December.

For 2008 and 2009, it is clear that inventory fell significantly month after month. In 2009, it went from 39,000 in June to 38,000, then 36,000 and 35,000 and so on.

That decline in inventory is what keeps the housing market stable because sales also decline from June through December.

This year, we aren’t seeing the same kind of drops in inventory. The number of unsold homes in the Washington region has been stuck around 38,000 since June. As a result, sales chances consistently have been below 20 percent.

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.

I expect chances will fall further in November and December. Things should improve early in 2011, however.

Sales always pick up in January and February, although the weather can cool things down, as we saw early this year.

The challenge we’ll face early next year is that inventory will be higher than it was at the beginning of 2010. So, unless sales really take off, sales chances (and prices) aren’t likely to rise much.

Send e-mail to csicks@gmail.com.

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