Months supply of inventory is the time it requires for all the homes to be sold at the current sales rate.
For example, if the MSI for this month is 6.8 months, it simply means that at current sales pace it would take 6.8 months to sell all the inventory.
"Why is this important Joe?"
Knowing what the MSI is doing would give you a clear picture on the general supply and demand of the market. Many will talk about the market using sophisticated diagrams and elaborate 'systems' but if you really want to know the pulse of the market, supply and demand (see 'Reno Market' category) still rules:
Reno Months Supply Of Inventory:
(click image to enlarge)
Note: MSI has been steadily going down (a good sign) due to the consistent increase from buyers even in the low winter season. The past two year's month March have been considerably higher than the current March--a great sign of strength for the Reno real estate market.
Sparks Months Supply of Inventory:
(click image to enlarge)
Note: Sparks real estate's MSI looks eerily similar to Reno's graph.
I have observe this for myself, buyers, first time home buyers and investors (looking for cash fow) have been eager to invest in Sparks.
Prices remain to go down (especially in the $300,000 and above market) but if strong demand continue prices in the $250,000 and below will stabilize.
Hi,
Although it is a positive sign that the median sales price has not decreased month over month, we will need to see this continue as trend for three months before we can speculate that we have hit the bottom and reached a price stabilization level,” Kris Layman, 2009 President of Reno/ Sparks Association of Realtors and sales associate at RE/MAX Realty Affiliates.
You're right Kris, that's why I said...
"but if strong demand continue prices in the $250,000 and below will stabilize."