What Is Absorption Rate?

The market climate will determine how quickly your home will sell. In a HOT market, like Santa Fe where there is limited inventory, meaning there are more buyers than homes to purchase, you can sell your home in a day. If there are more homes on the market than buyers, then you can expect a little longer for the home to sell. It’s really important to look at the absorption rate in determining timing. Absorption rate is a term most commonly used in the real estate market to evaluate the rate at which available homes are sold in a specific market during a given time period. It is calculated by dividing the average number of sales per month by the total number of available homes. Here’s another way to think about it…if not a single new home went on the market, how long would it take to run out of homes for sale? If it’s more than 3 months we’re in a buyers market and under 3 months, it’s a sellers market. In Santa Fe we’ve been well under three months and in a sellers market for quite a while. We can talk about the current absorption rate at the time we discuss listing your house.