The month’s supply of homes is a great indicator of whether it’s a seller’s or buyer’s market, and how bullish the market is in general. This barometer is calculated by dividing the number of homes available for sale by the number of sales per month.

We’ve tried to smooth out monthly anomalies by taking a three month moving average. Still, it’s clear that the beginning of the year was eventful. What made it so was not an unusual number of new listings but an abnormally low number of sales. So long as sales keep pace with the inventory of homes this line should be straight.

Anytime the month’s supply of homes is greater than two (months), it tends to indicate a buyer’s market. Note that for Belmont it’s currently at 3.25—clearly into Buyers market territory. To help put this number into perspective, for San Mateo County as a whole this number stands at 5.3 months and the national rate is over 10 months of inventory.

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