Ask any local REALTOR® and you will hear the same thing - "I need listings".
Compared to this time last year, listing inventory is considerably lower. This is great news if you are a seller, because with fewer homes to choose from, buyers may act quicker on making a purchase, for fear of losing out. Sales prices also start to get closer to asking price. In June of 2014, the absorption rate was 11.59 months. In mid May 2015, it has dropped to just 8.7 months.
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 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.