The C.A.R. is using a new metric – market velocity, which is what we’ve used here frequently to compare monthly solds to new listings:
Market Velocity – home sales relative to the number of new listings coming on line each month to replenish that sold inventory – continued its upward momentum in May, suggesting that home prices should grow further in the upcoming months. It is strongly correlated with increases/decreases in price growth with a roughly three- to six-month lag time.
It’s an imperfect measurement because the new listings each month don’t necessary have a direct relationship to those sold – very few are in both categories in the same month. But comparing the rate of change to previous months and years gives us some warning about what’s coming.
Here’s how the NSDCC market (La Jolla to Carlsbad) is shaping up:
This year’s momentum has been slightly better than last year, though not by much. We have had a fantastic week of closings too, and this month’s sales should match or exceed last year’s by the time the count is complete!
The number of new listings this month looks dramatically low, but the count should get into the mid-400s when the final count is in. No flood of supply yet!