Tracking the number of homes for sale provides crucial insight into market conditions through the fundamental principle of supply and demand. When inventory is low and fewer homes are available, buyers face more competition, which typically drives prices up and gives sellers the advantage in negotiations. Conversely, when many homes flood the market, buyers have more options and negotiating power, often leading to lower prices and longer times on the market.

By monitoring inventory levels over time, both buyers and sellers can gauge whether they're entering a seller's market with scarce supply or a buyer's market with abundant choices. This information helps buyers decide whether to act quickly before competition intensifies or wait for more options to appear, while sellers can determine if it's an opportune time to list or if they should hold off until inventory tightens.

Of course, low supply does not always translate to higher prices, as both supply and demand tend to reach their yearly lows around December and January, which results in low Median Sales Prices. Real Estate professionals and savvy investors rely more on the Months of Inventory (MOI) to inform whether supply is outpacing demand and whether a market is trending in favor of the buyers or the sellers.