By Bill McBride | Calculated RISK blog
Watching existing home “for sale” inventory is very helpful. As an example, the increase in inventory in late 2005 helped me call the top for housing.
And the decrease in inventory eventually helped me correctly call the bottom for house prices in early 2012, see: The Housing Bottom is Here.
I don’t have a crystal ball, but watching inventory helps understand the housing market. If inventory kept increasing rapidly in certain markets, then we would eventually see price declines. However it now appears the inventory build is over in some former distressed markets.
