The 2024 housing market looked progressively healthier with each passing month until Q4. The promising build in inventory during the first nine months of the year was wiped out, and Silicon Valley inventory fell to record lows in December.
In 2023, single-family home and condo inventory followed fairly typical seasonal trends, but at significantly depressed levels. Low inventory and fewer new listings slowed the market considerably last year. Even though sales volume 2024 was similar to 2023, far more new listings came to the market, which has allowed inventory to grow. Condo inventory even reached a four-year high in September before declining in Q4. For single-family homes, inventory is down 20% year over year, because inventory fell 60% in Q4 as new listings declined at a greater magnitude than sales.
Typically, inventory begins to increase in January or February, peaking in July or August before declining once again from the summer months to the winter. It’s looking like 2024 inventory, sales, and new listings will resemble historically seasonal patterns. However, single-family home inventory is once again near record lows.
Months of Supply Inventory indicated a sellers’ market in December
Months of Supply Inventory (MSI) quantifies the supply/demand relationship by measuring how many months it would take for all current homes listed on the market to sell at the current rate of sales. The long-term average MSI is around three months in California, which indicates a balanced market. An MSI lower than three indicates that there are more buyers than sellers on the market (meaning it’s a sellers’ market), while a higher MSI indicates there are more sellers than buyers (meaning it’s a buyers’ market). The Silicon Valley market tends to favor sellers, which is reflected in its low MSI. In 2024, Silicon Valley MSI moved higher, particularly in Q2. In Q4, MSI dropped across markets. MSI indicated a sellers’ market for single-family homes and condos with the exception of the Santa Cruz condo market, which is more balanced.
