An Explainer: Inventory

While the Oxford dictionary defines inventory as "all the goods in a shop", this has gained a slightly different meaning as far as real estate is concerned. An inventory in the real estate parlance means the unsold housing units in a given stock.In the past couple of years, a slowdown in the real estate sector led to a low volume of home sales. Owing to this, real estate developers across the country have not been able to push sales as expected. As a result, they are sitting on a huge unsold housing stock. In the world of real estate, this housing is stock is known as inventory. The swell in inventory is also indicative of how a particular housing market has performed in a specific time period — the higher the inventory, the lower the sales.A huge inventory stock would also indicate developers would exercise caution in launching new projects, as their earlier investments remain stuck. For homebuyers, however, this could be a benefitting scenario. At a time when developers have a huge unsold housing stock, property prices are likely to decline. Major real estate markets in India saw a price correction in the past couple of years owing to this particular reason.