As I reported last week, February was a great month for Washington-area home sellers. Home sales were up 29 percent over February 2010.
Today, let’s look at the other side of the supply-and-demand equation - inventory.
Inventory is the number of unsold homes on the market on the last day of the month. February ended with 24,001 homes in the inventory.
That’s a decrease of 136 homes from January, which is unusual. Inventory typically rises in February as more homes are listed in anticipation of the spring market.
But those two factors of supply and demand are inextricably linked. It was the strong sales that caused February’s inventory to be smaller than January’s. Both months saw about the same number of new listings, but February’s large sales figures kept the inventory down.
Low inventory and high sales are the combination we want to see when the market is improving, because the result is more competition among buyers. Competing buyers cause prices to rise.
The level of competition in February was good enough that several jurisdictions actually were seller’s markets, as indicated by high sales-chance figures.
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. Typically, a figure below 20 percent indicates a buyer’s market. Higher figures mean we’re in a balanced market or a seller’s market.
The highest sales-chance figure in the region was 78 percent in the city of Manassas. In 2007, chances there were among the region’s lowest. But since then, sharp declines in home values in Prince William County have attracted buyers in droves.
Chances in nearby Fairfax County, the region’s largest market, also were high enough to indicate a seller’s market - 50 percent.
Over in Maryland, the highest sales-chance figure to be found in February was 32 percent in Montgomery County.
Send e-mail to csicks@gmail.com.
Please read our comment policy before commenting.