Absorption Rate

The absorption rate is the rate at which available homes are sold in a specific real estate 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. The figure shows how many months it will take to exhaust the supply of homes on the market.

To calculate absorption rate, you need to have three figures:

1. The specific time period.
2. The number of homes sold during that time period.
3. The number of active homes currently on the market.

The first thing you need to do is figure out the Rate of Home Sales. That is calculated by dividing the number of days in the given time period by the number of homes sold during that period.

Once you have the Rate of Home Sales, multiply it by the number of active homes currently on the market and that will give you the Absorption Rate.

The Market Conditions Addendum (1004MC) in connectMLS includes the absorption rate:

You can access the 1004MC from the Reports menu: