Supply is the amount and type of real estate available for sale or rent at differing price levels in a given real estate market.  Demand is the amount and type of real estate desired for purchase or rent in a given market at a given period of time.

Variables that influence supply:

• availability of skilled labor
• availability of construction loans and financing
• availability of land
• availability of materials

Variables that influence demand:

• Price of real estate
• Population numbers and household composition
• Income of consumers
• Availability of mortgage credit
• Consumer taste or preference

Typically an over-supply of homes or land in a given area will mean lower prices.    If there is an under-supply of homes and land, then prices will usually rise.