January 2012 Absorption Rate

Last month when the Sales Activity Report came out, I used those figures to find our market’s weekly absorption rate. (See December 2011 Sales) Remember that this is the rate that homes will be sold in a given area.  In other words, it tells us the number of weeks it takes to sell the current inventory at the present rate of sales.

I calculated that in December, it would take 36 weeks to sell the total inventory of homes available.

 

Let’s look at January’s absorption rate. Currently, there are 1074 homes for sale.  In January, 80 homes sold.

  

To figure absorption rate :

# listings available                                                                                                                    1074

# listing sold in the last month X 12                                                                         80 X 12 = 960

Divide this # by 52 wks                                                                                              960 / 52 = 18.46

At this rate 18.46 units are selling each week

Divide that number by the # of listing available

to get the absorption rate                                                                                    1074 / 18.46 = 58

Last month our figures showed it would take 36 weeks to have our entire inventory sold and now this month it has jumped to 58 weeks.  This is not surprising for this time of year.

Many analysts will tell you that you can get a better idea of the market for your home by calculating the absorption rate in your price range rather than the overall market.

You can use the information in the chart below or give me a call.   I will gladly help you figure your absorption rate.

Source is the Ozark Gateway Association of Realtors

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