by Calculated Risk on 3/24/2008 12:43:00 PM

For more, see my earlier post: February Existing Home Sales

Click on graph for larger image.

The first graph shows the inventory by month since 2002.

There are two key points: During the boom years (2002 through mid-way 2005), inventory levels stayed fairly steady. During the bust years, the inventory level has increased to a new record level for each month.

February 2008 was no exception. Even though inventories decreased slightly from January, inventory is at an all time record high for February.

With the coming Spring selling season, the question is: Will inventory levels keep setting new records, or will inventories hold steady (or even decline)?

The second graph shows the normalized seasonal inventory pattern for the last few years. The data is normalized to the ending level of the previous year = 100.

Note: the NAR doesn't seasonally adjust inventory.

This shows that the inventory level usually increases through July, with some noise. The next few months will tell us if inventory is stabilizing, or if the decline in February was just noise.

And finally, here is a repeat from earlier this morning. This is a graph of Not Seasonally Adjusted existing home sales for 2005 through 2008.

I'm repeating this graph so emphasize that February is typically one of the least important months of the year for existing home sales. Small changes in actual Not Seasonally Adjusted sales (due to weather, leap year, or other factors) can have a significant impact on the headline Seasonally Adjusted numbers.

The data for March will be much more important since that is the beginning of the Spring selling season.