One of the most valuable housing market metrics is months of supply. That’s the number of months it would take to sell all the homes currently for sale, given the current sales pace.

The reason it’s so valuable is it’s the barometer for the balance between supply and demand.

May’s number for the region was 1.9 months. It’s the low point so far this year and about where it was this time last year.

Not too long ago, back in May 2015, the region had 11 months of inventory. That’s the year before the market began picking up steam. By May 2016, sales had picked up and the months of inventory had dropped to 8 months. By 2019, it had dropped to two months and less then stayed there.

Months of inventory by price range vary widely. For example, sales in the affordable market are where months of inventory are the lowest. That price range of $100K to $250K average accounting for about 37% of all sales and there’s a smattering of sales for less. That pulls the regional total down top the 1.9 months range, even though there’s more to the market.

Last month’s inventory was a tough market picture, but when you look at it in price ranges for the region’s four major areas, a more precise picture comes into focus.

That’s the barometer market hawks will watch in the summer and early months of fall. The number they’d like to see is 5 to 6 months of inventory. That’s the point when buyers and sellers typically have equal footing. There’s also little likelihood to see it in anything but some selective price ranges.

Currently, the best regional supply-demand picture is now in the $400-$499,999 and $500-$599,999 price ranges. Both are 4.7 months and out of the range for most average local buyers.

The solution is to the region’s inventory issue is simple. It needs a lot more inventory, and that’s where the latest sticking point has cropped up.

 New home construction – as measured by new building permits – has decreased locally and across the nations. Flips, which have traditionally helped supply the affordable inventory, are also down and the major inventory resource – existing owners – is in partial lockdown because many are not willing top give up their low mortgage rates. It’s estimated that abut two-thirds of the existing mortgaged properties have a mortgage rate of 4% or less.

Home sales and prices have been surprisingly robust so far this year, and months of inventory in the top range of the affordable market is increasing in some markets. But the inventory building market dynamics have stagnated. They’re stable enough to sustain the status quo, but it’s keeping the market stuck in the rebuilding phase of the housing market cycle.