✅ Inventory Level (Active Inventory)
What it is:
The total number of homes currently for sale in a given market (city, county, MLS area, price range, etc.)
What it tells you:
-
How many options buyers have
-
How competitive the market is
-
If inventory is rising or shrinking
Example:
Concord, NH currently has 120 active listings.
That number alone doesn’t tell you how fast they’re selling — just what’s available today.
✅ Absorption Rate
What it is:
The rate at which homes are selling in a market — basically, how fast buyers “absorb” existing inventory.
It’s calculated as:
Absorption Rate = (# of homes sold per month) ÷ (inventory)
or
Months of Supply = inventory ÷ sales per month
What it tells you:
-
How fast the market is moving
-
How long it would take to sell all current listings if no new homes were added
Example:
If Concord sells 40 homes a month and has 120 homes on the market:
👉 Absorption Rate = 40 ÷ 120 = 0.33
(meaning 33% of the inventory sells each month)
👉 Months of Supply = 120 ÷ 40 = 3 months
(tight seller’s market)
