Absorption Rate
1.52, Last Year 2.08
Absorption Rate Definition-
The Absorption Rate, in Months chart shows how long the current inventory of properties would last at the current rate of sales.
If no new properties were added to the market, and sales continued at a steady pace, the Absorption rate indicates the number of months required to sell all the properties on the market.
Absorption rate is based on two numbers:
- The number of active listings
-
The average number of listings sold per month for the previous n months.
The number of active listings is a "snapshot" of listings active on a single day (the 15th of the month). The number of months of sold listings, here, is 12.
The formula is Absorption Ratio = A ÷ N
Where A = listings active on the 15th of the month, and
N = the average number of listings sold during each of the previous 12 months
