Inventory, defined as the number of properties offered for sale, is a good indicator of current market trends. If inventory is low because of building restrictions or geography, then high demand will lead to rising prices. In rising markets, sellers often capitalize on the excitement of new listings to get properties under contract quickly, at premium asking prices.
There are also seasonal fluctuations in inventory, such as fewer listed properties in the winter months than in summer and a surge of listings in the spring. Some areas, such as resort destinations, follow seasonal trends.
Generally, seasonal drops in inventory reflect the trend to market properties more aggressively in spring and summer months when real estate markets are more active. Properties sell year-round, though investors should plan to reduce the price for winter listings or at least know that properties take longer to sell during those months.