Unsold Inventory Index

DEFINITION of 'Unsold Inventory Index'

A monthly statistic released nationally that details the number of unsold homes expressed in the time (in months) it would take to sell them at current rates. When the unsold inventory index is compared to the average number of sales per month in the recent past, it indicates the pace or velocity of home sales.

BREAKING DOWN 'Unsold Inventory Index'

The unsold inventory index is watched closely on local, state and national levels as a primary indicator of housing-market health. A rising index number indicates a slowing market, while a declining number means the market is improving. For example, if the unsold inventory is two months, it would be considered a seller's market, while eight months would be considered a distressed or buyer's market.