If you asked an economist why home prices have broadly fallen over the past 2 years, you’d get a short lesson in Supply and Demand.
Too many homes for sale and not enough people to buy them pushed values lower until a balance point can be reached. Looking at the chart at right, that balance point may be fast approaching.
According to data compiled by ZipRealty, the total number of homes listed for sale fell in February 2009 in 23 of 24 major housing markets.
This is an especially important data point because home inventories typically rise in February, ahead of the Spring Home-Shopping Season.
Since 1982, February home inventory has been up 3 percent on average. Last month, it fell.
So, in support of the Supply and Demand Theory, we shouldn’t be surprised that the rate of price decline as shown by the Case-Shiller Home Price Index is easing in a lot of markets, too.
We may not have reached the housing market bottom yet, but if we haven’t, the data shows us we’re likely very close.
Home Listings for February Stayed Steady
The Wall Street Journal, March 5, 2009