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Today, in the Calculated Risk Real Estate Newsletter: Case-Shiller National Index up 18.8% Year-over-year in December
Excerpt:
This graph below shows existing home months-of-supply (inverted, from the NAR) vs. the seasonally adjusted month-to-month price change in the Case-Shiller National Index (both since January 1999 through December 2021).
Note that the months-of-supply is not seasonally adjusted.
There is a clear relationship, and this is no surprise (but interesting to graph). If months-of-supply is high, prices decline. If months-of-supply is very low (like now), prices rise quickly.In December, the months-of-supply was at 1.7 months, and the Case-Shiller National Index (SA) increased 1.31% month-over-month. The black arrow points to the December 2021 dot. In the January existing home sales report, the NAR reported months-of-supply decreased to a record low 1.6 months in January.
My sense is the Case-Shiller National annual growth rate of 19.98% in August was probably the peak YoY growth rate, however, since the normal level of inventory is probably in the 4 to 6 months range – we’d have to see a significant increase in inventory to sharply slow price increases, and that is why I’m focused on inventory!
Note: I’ll have more on real prices, price-to-rent and affordability tomorrow.emphasis added
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