Southwest Metro - Real Estate sales absorption rates

There are a number of methods to measure the health and strength of the real estate market. A statistic that reflects on both supply and demand for homes that is an excellent summary of both of them in most area's is called the absorption rate or the saturation rate.

As an example, below is chart from the Multiple Listing Service (pulled 3-1-23) This particular graph reflects the top 25% of price bracket homes ($575K+) in the SW Metro (All real estate is local!) and their corresponding saturation rates. As you can see, we are effectively looking at a mirror image of where we were a year ago. Limited supply, with consistent buyer demand.

In simple terms, it is the length of time in any given market how long it would take for ALL the homes on the market to be SOLD to the buyers that are buying those homes. An example would be, if it is 2.5: If no more buyers entered the market and no more homes were put on the market it would take approximately 2.5 months for all those homes to be sold. 

If you are a bit more of a data wonk, HERE is a great link to a recent post from Rocket Mortgage about how it is calculated and what it means.