San Diego Housing Market News and Analysis
February 2015 Housing Data Rodeo
Submitted by Rich Toscano on March 22, 2015 - 5:44pm
As of January, there was a big divergence between pending and closed sales: closed sales were very weak (even considering the seasonality), but pendings were strong. This gap narrowed substantially in February as closed sales made a big catch up move. Check it out in the graph below... closed sales were unusually low in January, but a lot closer to recent years (albeit still somewhat low) in February.
Pending sales on the other hand were not at all weak in January, a fact which augered the rebound in closed sales. And they were similarly strong in February -- so we should expect further catch-up in closed sales.
Now this is all relevant to ye olde supply and demand thing. The strength in pendings implies fairly strong demand, somewhat higher than last year. Where does supply stand? Very similar to this time last year, it turns out:
Flat supply and increased demand translates to a lower months-of-inventory reading:
Now, the current months of inventory is quite low on an absolute scale:
...but that's the norm for this time of year. You can see that we were at the same level in the beginning of 2014, but as the year progressed, supply and demand got back into a better balance.
And as we know, this key metric of supply vs. demand is generally a great indicator of near term price pressure:
The graph above implies that the current level of inventory should put upward pressure on prices. And they did indeed rise in February...
But these are still the somewhat dead winter months, and months of inventory could change pretty dramatically as the market gets going, as happened last year.
If months of inventory stays at these levels, we are looking at some potentially signicant upward price pressure. But, please note the "if." We will get a better idea over the next couple of months as the spring season kicks in.
Graph dumping ground below:
~Active forum topics~