The absorption rate is the amount of time it would take for the market to "absorb" or empty out the current inventory if homes continued selling at the same rate with no new homes coming on the market. It can be measured as days, weeks, or months of inventory. This is one of the most helpful ways of getting a pulse on the market in Silicon Valley real estate (or anywhere else)!
Below please find a chart which shows the months of inventory for single family homes in the Almaden Valley area of San Jose.
What is odd here is that the market seemed to have been steadily improving and then suddenly took a severe turn for the worse in September closings (representing sales that happened in August). Is this a fluke or a new trend? We'll have to see more data to know - but it's not encouraging..
Cheers!
Mary
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