Back in 2008 we set a target for the number of houses for sale to decline to a level compared to the 1960’s. In the sixties the number of homes for sale monthly average was around 250,000 homes per month. As various recessions happened back then and in the early 70’s these periods show that the number of homes for sale can even drop below the 250,000 homes for sale number.
5 years ago when we tracked and wrote about this trend we expected some dipping below 250,000 units but it dipped down to 150,000 units for sale. This was well below what we had expected on the downside however the extreme exaggeration to the upside that occurred from 2005 - 2008 was enormous.
When the economy runs at normal levels and housing is not the source of the economic problem the number of homes for sale should be about 325,000 units in a non-recession period (recessions shown in pink on the left). There will be dips down to the 250,000 level.
What we now see is that the homes for sale finally reached bottom at the 150,000 unit level as shown on the left and you can now finally see a small increase in the number of homes for sale.
Many factors play a role in the composition of this number however we think this is one of the best single indicators of a recession bottom. Keep in mind the chart shows a little bit more of a curve up because this chart is a forty year chart which can exaggerate the small curve you see.
If we look at the same chart but for only 10 years you will understand better. Look at the 10 Year graph on the left. The entire year of 2012 shows us that the number of homes for sale sat at about 150,000 units for sale for the entire year. The numeric data shows us that the number of homes for sale in 2012 were running at about 145,000 units for sale with a small lift up in November to 151,000 units for sale.