The two key metrics shown in the below graph are the volume of homes that are for sale and the number of sold homes. The numbers show that there are 14% fewer homes for sale June 2009 compared to June 2008. In addition there are 5.5% fewer home sales this year compared to last. What is even more important is the ratio of for sale to sold. In 2008 there was an 8.1:1 ratio and that ratio fell in 2009 to 7.4:1!

That ratio is a key indicator in the strength of the housing market. As that ratio drops lower and lower the demand for houses will begin to equalize with the supply. The ratio will continue to drop due in a large part to the increased number of pending transactions. When this happens, like in all markets, prices begin to rise, and the time it takes to move merchandise drops. In real estate this is the transition period from a buyers market to a sellers market.