According to both NAR’s and HousingTracker’s numbers, existing home inventory in the nation’s 54 major metro areas was down almost 21% in January compared to January 2011.

If you check out Calculated Risk’s chart, you’ll see the typical yearly cycle of inventory (click to enlarge):

Inventory is cyclical... and declining

You’ll also notice that, while inventory was pretty much flat from January 2010 to January 2011, it dropped significantly in 2012. Part of that is because of the reduction in REOs and foreclosures after banks were caught playing fast and loose with their paperwork.

Despite that logjam (which will clear over the next coupla years), CR still believes inventory has dropped for the long haul:

There is also a large “shadow inventory” that is currently not on the market, but is expected to be listed in the next few years. But this year-over-year decline is significant.