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MLS data for New Listings is accessible dating back to 2021.
This year (2023) to date has been the lowest number of new listings that have come to the market on record - over 10K lower than this time in June of 2020. Multiple years of low-interest rates have set the real estate market up for the low inventory problem we are now facing. With higher rates, nobody wants to move and give up their low-monthly mortgage payments.
We need to keep an eye on unemployment. A rise in unemployment will force many homeowners with low equity positions to sell or face foreclosure. This is a horrible way to create more housing inventory, yet part of the cycle that we have experienced in the past. 

Jun 7 - Last week was very quiet for new contracts, with only 1,589 being accepted across Greater Phoenix. This followed another quiet week at 1,737. Both these numbers are lower than every week in 2023 except for the first 2 weeks of January, which are always low.

This leads us to conclude that buyer demand is going down and the culprit is obvious. Buyers much prefer interest rates around 6.5% to those around 7%.

Both demand and supply are low, so we can expect unimpressive volumes during June and probably July too. On the other hand, if rates were to drop back to 6.5% or below then activity would probably pick up again.

Jun 6 - Below is the newly published months of supply chart for the single-family detached market in ZIP code 85142.

I like this chart because it shows clearly the scale of the deterioration of the market during the second half of 2022 and also the large improvement we have seen in 2023. This is from the perspective of sellers since they would benefit from low supply relative to the monthly sales rate. Buyers see things from the opposite perspective.

The long-term normal supply is around 3 to 5 months for a ZIP code like 85142. As we dip below 3 months, things usually get tough for buyers and as we rise above 5 months things get difficult for sellers. We almost hit 6 months at the start of December and have lost nearly two-thirds of that supply over the past 6 months. That is a big change folks!

This chart works particularly well for 85142, and it is one of my favorite ZIP codes. This is because it is a BIG one, containing a much larger number of homes than average. This means we get a lovely big sample size every time we measure it. To a statistician, the sample size is of the utmost importance. Small samples lead to ugly charts and poor-quality information. Large samples lead to beautiful charts and a clear picture of what is going on.

Not all ZIP codes are as rewarding to measure as 85142. Some are extremely small and the sample size sizes are so tiny, they are exasperating. I am looking at you, 85003, 85004, and 85034, to name but a few.

I sometimes get requests to measure subdivisions. I have to politely decline. Attempting to do this is certainly possible but it is usually completely pointless. The sample size for a subdivision is so small that any statistics derived from it look like random data. A good rule of thumb is that you want around 100 sales per month before you can get reliable statistics for a sub-market. Very few ZIP codes are big enough to achieve that. Some that do include 85132, 85138, 85142, 85143, 85212, 85249, 85326, 85338, 85374, 85383, 85387 and 85396.

If a ZIP code generates fewer than 50 sales per month, I advise you to treat all its statistics with due caution. Below 20 sales per month, then it is frustratingly poor at giving us reliable information.

ZIP codes are defined by the US Postal Service to assist in the delivery of mail, They do not give any consideration to statisticians when they define them, and we should not expect their sympathy or cooperation. But we thank them for big beautiful ZIP codes, especially 85142 and 85383, and we hope they don't decide to split them up in the future.

© 2023 Cromford Associates LLC - commentary by Michael Orr