- "Completed" is the number of units that have been registered as being completed in a given month.
- A unit is "absorbed” is when a binding, non-conditional agreement is made to buy or rent the dwelling.
- "Unabsorbed inventory" is the total number of units that have not been absorbed.
- "Completed but unabsorbed" is the number of units that completed but were not absorbed in a given month.
"Unabsorbed inventory" (U) is theoretically derived from "completed" (C) and "absorbed" (A) as follows (where i is a given month and i-i is the previous month):
U[i] = U[i-1]+C[i]-A[i]
So taking the reported unabsorbed inventory and reconstructing it using completed and absorbed data should produce a match. CANSIM data are only available for single and semi detached properties so these are the data I have used. Alas they don't seem to track very well in absolute terms:
The reason for the divergence is unclear but a much more interesting thing arises upon visual inspection: the higher-frequency terms appear to track each other closely. To isolate this effect I added a first order highpass filter with 6 month time constant and yield the following result:
Indeed for most of the series over the past 24 years the higher frequency terms are similar, except in the past 18 months or so where the reported absorbed inventory has fallen markedly short of reported completions, but this is not showing up in the reported unabsosrbed inventory.
I'll leave it for CMHC to figure out what's going on before making any speculations, but for those tracking unabsorbed inventory when looking for potential distress in housing markets, this should be something that should be resolved. If I can find the multi-unit absorbed/unabsorbed datasets I'll add to the analysis to see if this effect carries over. (Multi-unit is a much more significant component of Vancouver CMA's construction activity; detached is about 25% in terms of dwelling completions in the past few years.)