How Do I Calculate Absorption Rate: Time Frame, Total Homes Sold, Present Active Homes

Often we receive questions as to how one calculates an "Absorption Rate" for Montana Real Estate and Homes.

Calculating SW Montana Homes Absorption Rate for 2011:

1. Time Frame is total days from January 1 to December 31 = 365 days 
2. All Sold SW Montana Homes, all Areas from January 1 to December 31 = 1,910 
3. All Active SW Montana Homes, all Areas at the end of December 31 ≈ 1,250 

Absorption Rate Calculation Details:

Rate of SW Montana Home Sales ≈ .1911. Therefore, ONE SW Montana home is sold approximately every .1911 DAYS. This number is calculated in this way: divide 365 by 1,910 ≈ .1911 (Time Period/Number of SW Montana Homes Were Sold, precluding Recreational, To Be Built, and Timeshare properties.)

Absorption Rate ≈  239 DAYS, about 7.96 months, so we'll round to 8 MONTHS as the Absorption rate for the year 2011. This number is calculated in this way: multiply 1,250 times .1911 ≈ 239 days (Total Active SW Montana Homes x Rate of SW Montana Home Sales.)

ABOVE: Total Number of Residential SW Montana Real Estate Listings Sold, January to December 2011

ABOVE: Approx. Number of Residential SW Montana Real Estate Listings For Sale on December 31, 2011

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