An alternate method to analyze the market is by looking at the Month’s Supply of Inventory. The reverse of Absorption Rate, this number represents how many months it would take for all the homes currently for sale, to sell at the current pace. You can calculate the Month’s Supply of Inventory by dividing the total number of homes for sale by the number of homes sold each month.
For example, if there were 15 homes for sale in December, but only 6 sold (15/6), there is 2.5 month’s supply on the market for sale. Three to six months of supply is average: if the number is smaller, it indicates a seller’s market. If the number is greater, a buyer’s market is likely. The more extreme the mark on the continuum, the stronger the market polarity.
Hint: we do the calculation for you each week in this report and indicate whether the market is balanced, favors one segment, or strongly favors one segment. Easy peasy!
Information and statistics derived from Northwest Multiple Listing Service.