by Calculated Risk on 7/26/2005 02:22:00 AM

Existing home inventories rose to 2.653 million in June. Because sales were so strong (7.33 million annual rate), this represented a supply of 4.3 months.

I expect a further increase in inventories based on recent articles like this one: D.C. Area Housing Market Cools Off.

Home sales tend to slow in the summer, but the number of houses for sale in the Washington area has climbed by 50 percent in recent months. The available inventory has risen to about 35,300 homes, up from an average of about 23,000 in the past three years....

Therefore I expect a further increase in July inventories to 2.9+ million (from 2.653 million in June). I also expect to see a small drop in July sales to maybe around 6.8 million (still very strong) annual rate.

If both of these predictions hold, this computes to a 5.1 month supply - the highest level in a number of years.