What exactly is days inventory?
It’s a simple measurement of how many homes are on the market and it tells you how hot the market may or may not be.
Days Inventory is a measure of how long it would take for all of the properties currently on the market to sell, assuming no new listings were published. In other words, how long, if we stopped listing homes today, would it take for us to be completely out of available homes for sale.
How DAYS Inventory relates to the market trends
There is a basic observation one can make by looking at the current days inventory. When homes are “flying off the shelves” like COVID-19 toilet paper, the days inventory will be a low number. Conversely, if homes sit for a long time, that number will go up.
The basic laws of supply and demand would suggest that if demand stays the same and supply decreases (less homes for sale) prices will rise. If demand stays the same and more homes are listed than are sold, prices may fall, or soften.
We can compare short term trends (30 days) against long term trends (1 year) to determine what direction the market may be headed, but moreover, we can determine whether or not we are in a seller’s market, or a buyer’s market.