Home prices pulled back in January, despite increasingly tight
inventory and robust sales.  Supply and demand will be
discussed later; first, some graphs on prices. 

The median price per square foot fell on a month-to-month basis by
.9% for detached homes, 6.4% for condos, and 2.3% in
aggregate.  The graph below shows that such huge moves occur
somewhat routinely for condos, so as always, it makes more sense to
pay attention to the detached home line in blue.

Here’s a look at prices starting from the bubble peak:

The Case-Shiller proxy (which uses a 3-month moving average of the
single family price per square foot) was up .3% for the month. 
Here’s a chart from the trough, showing that the uptrend that began
a year ago thus far remains intact despite last month’s weakening of
the price per square foot:

Same thing from the bubble peak:

Meanwhile on the supply front, inventory has continued to plummet:

Here’s another look at inventory, but separated out by year so you
can compare months with like months.  Look at that lonely
little blue square down there on the left… this is totally unlike
what we saw a year ago (down 40%, to be specific).

The difference in active inventory (which excludes contingents,
i.e., short sales with offers waiting for bank approval) is even
more stark — down 50% from a year ago!

Meanwhile sales activity was fairly robust, with January actives and
pendings higher than in recent years:

And thus did months of inventory continue its plunge into the abyss:

Again, behold the lonely blue square — this one 43% below its level
of a year ago:

Months of inventory is very important in my view, because it seems
to drive near-term price movements per this chart that I am always
going on and on about:

Well, now we’ve hit a new post-bubble low in months of
inventory.  Interesting that prices actually weakened the same
month, but I am not making too much of this, because the seasonal
tendency is for prices to be weakening now.

In the past, divergences between these two series have resolved
themselves in favor of months-of-inventory.  If that continues
to be the case, and inventory remains this constrained, then we
should expect further price gains to come.