With the real estate market in a state of flux, absorption rates are increasingly used as an indicator to assess how long it would take to sell ALL the existing condos in each condominium, assuming the rate of sales stays constant and no new listings are added to the inventory. Additionally, absorption rates are the best way of tracking market performance. They are usually used to indicate "overall real estate market performance," or how an entire market is doing.
To calculate monthly absorption rate, I have taken all the condos that are currently on the market in each building in the South of Fifth Street (SoFi) neighborhood of South Beach, and divided them by the number of listings that have sold in their respective condo in the past six months and divided that number by six. Many people compute absorption rates by using the number of sales in a one month period, but I use a six month sales average so it "smoothes" the seasonal "peaks and valleys" to gauge the true overall activity.
The data was based on information from the Southeast Florida Regional (SEFR) MLS or from the associations participating in the SEFR for the period 1/1/07 through 9/3/2007.
Here's the math for South Beach condos-market statistics: