Word: Absorption rate

absorption rate

A market’s absorption rate is one way to figure out whether a certain area is behaving for the benefit of the buyer or the seller. Absorption rate is the number of months it would take to sell the currently listed homes in the market. The absorption rate is calculated by dividing the number of homes sold during a period by the number of homes for sale at the end of the period. An absorption rate of 20% or more indicates a seller’s market since homes are selling fast and the number of months supply is low.

 

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