Absorption Rate: Interpreting the Numbers

Absorption Rate: Interpreting the Numbers

Posted On: January 17, 2018 by Northeast Iowa Regional Board of Realtors in: General, home buyers, home selling process, REALTOR

Pricing a home accurately is a critical factor in the home selling process. The right price depends on the current absorption rate in your market. Absorption rate is the number of months it would take to sell the number of homes currently on the market. That sounds like easy math, and it is for the most part. This concept is used by many real estate related businesses to predict home prices and sales activity of the future.  A six-month supply of homes on the market is a balanced market. This is when the number of buyers equals the number of homes for sale. More than a 6-month’s supply is considered to be a buyer’s market and those numbers below 6 months present a seller’s market. As you can see from the graphs, Cedar Falls has been on a wild ride in a seller’s market for most of 2017. This would explain the houses selling faster than some buyers can get an offer written. This is not a market for the unrepresented buyers—you need a REALTOR®...