Typically, when the number of houses for sale drops, price gains follow. Which is why reports that inventory was at its lowest level in four years at the end of June is a positive indicator for the housing market. In more than 900 metropolitan areas, 2.34 million houses were for sale on multiple-listing services and, according to a quarterly survey of 28 metro markets from the Wall Street Journal, inventory levels were down in 25 of the tracked areas. Some analysts, however, believe inventory is down largely because banks have been processing foreclosures at a slowed pace. But, though concerns about shadow inventory persist, falling supply is one of a number increasingly positive indicators for the housing market. More here.