It’s not rocket science to note that when housing supply increases, the discount between asking and closing prices follows suit: properties have more competition and sellers must lower prices to move their homes. Conversely, when supply drops, so does the discount.
We found that Jonathan Miller’s chart confirms what we’ve been seeing over the last few months: increased sales activity during the Summer served to reduce inventory to the point were new listings roughly equaled absorbed listings. This dynamic is responsible for the narrowing of spreads we’ve been noting between asking and closing prices. This, in turn, has served to bolster seller confidence going into the traditionally slow winter months. With inventory back on the rise, just follow the bouncing ball in terms of what’s likely to happen to prices.