North Shore Housing Inventory remains low in May

Using the same data as in previous months, the inventory of Single Family Homes (SFHs) remained pretty steady at 4.6 months supply as of May 1, compared with 4.5 months at April 1. For condos, supply increased from 5.0 months to 5.5 months.

April sees a flood of new properties coming to market for the peak spring selling season so an increase in supply is normal. In actual numbers, there wee 725 SFHs available (that is without an accepted offer) compared with 623 a month earlier, while there were 346 available condos, up from 292 a month earlier.

These numbers make the point that while the absorption rate remains high, there are now more properties available for sale, as one would expect at this time of year.

I am not publishing the tables I have shown in recent months because I have decided to change my methodology. I have been using the Last 3 Months for calculating absorption rates and hence how many months of supply is represented by the available properties. The problem with that is that is that it makes no allowance for seasonality. For example, April’s number of homes for sale – the start of spring selling – was compared with actual sales in January- March, the slowest quarter of the year.

For this month I am using the Last 12 Months believing that this will smooth out some of the seasonality. It’s not perfect, but then neither is the weather in New England and that’s the real cause of the seasonality.

Using L12M, the inventory for SFHs drops to just 3.6 months, with Peabody under 2, and several under 3. Here is the table:

Source: MLS, Oliver Reports

Similarly, condo supply drops to 4.4 months, with Salem, the largest condo market, being one of the tightest. Here’s the condo table:

Source: MLS, Oliver Reports

The equation is unchanged: low inventory + low mortgage rates = higher prices.