When Should We Worry About Rising Inventory?

Inventory is rising—and nearing levels that, according to our model, tend to lead to falling home prices. We use months of supply as our measure of inventory, and estimate that prices begin to decline about 9 months after inventory crosses a threshold o

The number of homes for sale across the U.S. is climbing—gently in some markets, more steeply in others. For months, analysts and investors have been asking a now-familiar question: At what point should we start to worry?

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Six months of inventory is often cited as the point at which the housing market shifts from tight to soft. This rule of thum…