| June Listing Data Indicates Likely Greater Pricing Pressures |
| Written by Jonathan Smoke | |
| 07.05.2007 | |
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Discuss this article on the forums. (0 posts) The National Association of Realtors reported on Tuesday that its index of pending home sales fell 3.5% in May. ZipRealty released June listing data on 18 covered markets in the Wall Street Journal today. In those covered markets, total listings were up an average of 5% over listings at the end of May. Only one covered market, Tampa, had a decline in listings. These data points affirm our prior conclusion based on reported sales and prices for May: the overall national housing market, statistically influenced by the largest 90 MSAs, should be reaching its bottom soon. May, and likely June, were months for continued descent as these big markets reach for the bottom. Utilizing the ZipRealty data, the Wall Street Journal has a nifty interactive tool for charting the listings data for these cities.  Rising June listings aren’t necessarily a sign of significant further decline. The overview notes: “The rise in the number of homes listed in June was broadly in line with historical trends. In recent years, inventories have tended to rise in June. On average over the past two decades, though, they have declined slightly during that month.”
These data points are relevant to track, but be careful not to fall into the trap that listings equate to inventory. Listings are a proxy for inventory, and thanks to multiple listing services and the web, we can get timely readings like this from ZipRealty.  But, what matters more than listings is the number of vacant homes represented within these listings. Homes that are vacant put greater downward pressure on prices, as the opportunity cost of not lowering prices to move the inventory can influence owners and realtors to do what it takes to get the home closed. Listed homes still occupied by owners or renters have an often acceptable alternative to dropping the price: keeping the property as is and even removing it from the market.This is also why speculative finished inventory puts greater pressure on builders than dirt lots yet to be constructed. Unfortunately, there are no detailed dynamic sources like these to help us understand true inventory, so we take timely information like this and interpret it with a “grain of salt.” 
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