Real Estate

What the Heck is Months of Inventory??

As a REALTOR®, I’m often asked, “How’s the market?” Of course, everyone wants to know about current interest rates, but I usually throw something in there about months of inventory. Well, as my broker pointed out a few days ago, “Does anyone really know what that means?”

Oops! I’ve been using that term and because people are hesitant to ask, I assume they know (and we all know what assuming does). This video answers the question, “What is months of inventory in real estate?”

According to the National Association of Realtors (NAR), inventory refers to the number of active and pending listings on the market in an area.

Meredith Dunn, Research Communications Manager at NAR, says, “The months’ supply is the number of months it would take the current inventory of homes on the market to sell given the current sales pace.”

A lower inventory tends to push prices up. We call that a seller’s market. A higher inventory drives prices down leading to a buyer’s market. Yes, there is a sweet spot in between called a balanced market.

To give an example, today, October 5, 2023, we have 3.4 months of inventory in Lake Jackson, Texas. If that number stays the same, it will take 3.4 months to sell all the current active and pending listings in Lake Jackson.

Months of inventory is just one part of what we watch to gauge the market in our area. So please keep asking the question, “How’s the market?” Agents are informed and we’re checking stats on a daily basis to stay up to date.

You can find me and more things real estate on Instagram at Linda Goff – REALTOR® (@whereweabide) • Instagram photos and videos