Dave Stark [PDF]:

The chickens came home to roost a little bit in the second quarter of 2006, as sales of both single family homes and condominiums were down in all markets and price ranges when compared to the same period last year. However, if we look at the full year thus far, we see that the pace of sales is still roughly the same as it was two years ago in 2004. Overall residential sales were down 9.3% for the full MLS, and down 12.1% in Dane County. Inventories have continued to rise as well. The problem, particularly for sellers, remains the same; inventories are double what they were two years ago, and 50% to 70% higher than last year.

Days of inventory remain much the same as they were after the first quarter. However, it’s interesting to note that the number of days of active inventory rose very little from 2004 to 2005, then nearly doubled between 2005 and 2006. Even though inventories started rising last year, the rising pace of sales kept average selling times and absorption rates fairly level. This year, even the relatively modest downturn in sales has caused inventories to really back up.

Dave Stark is a long time friend and client.