by Calculated Risk on 5/23/2008 01:31:00 PM

The first graph shows the year end months of supply since 1982 (and April 2008).

Click on graph for larger image.

The months of supply has risen to 11.2 months, and will probably be over 12 months sometime this summer. I don't have monthly data back to the early '80s, but the months of supply will probably be close to an all time record by July.

The second graph shows annual existing home sales and year end inventory. As the NAR recently noted 2007 was the fifth highest sales year on record.

Note: for 2008 I used the April sales and inventory numbers. All other numbers are annual sales, and year-end inventory.

If the red columns (inventory) rises above the blue column (sales) - something that will probably happen this summer - then the "months of supply" number will be over 12.

The third graph shows the annual sales and year end inventory since 1982 (sales since 1969), normalized by the number of owner occupied units. This graph shows that inventory is at an all time record level by this key measure.

This also shows the annual variability in the turnover of existing homes, with a median of 6% of owner occupied units selling per year. Currently 6% of owner occupied units would be about 4.6 million existing home sales per year. This indicates that the turnover of existing homes - April sales were at a 4.89 million Seasonally Adjusted Annual Rate (SAAR) - is still above the historical median.

This suggests that sales of existing homes could fall further in 2008.