The absorption rate is number of months it would take to sell all of the homes on the market at the current rate of sales. Softer demand in the second half of 2010 kept inventory of existing homes at a relatively high level of 9.4 months. However, the inventory has declined substantially from its peak of 12.5 months reached in July. A six month supply is considered balanced between buyer's and sellers. Anything lower favors sellers and anything higher favors buyers.
Historical Absorption Rates
2010: 9.4 months - Favors Buyers
2009: 8.8 months - Favors Buyers
2008: 10.5 months - Favors Buyers
2007: 8.9 months - Favors Buyers
2006: 6.5 months - Balanced
2005: 4.5 months - Favors Sellers
2004: 4.3 months - Favors Sellers
2003: 4.7 months - Favors Sellers
2002: 4.7 months - Favors Sellers
2001: 4.6 months - Favors Sellers
2000: 4.5 months - Favors Sellers
1999: 4.8 months - Favors Sellers
Source: National Association of Realtors, KW 2011 Vision Speach
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