Absorption Rate

The rate at which available homes are sold in a market during a given time period. Calculated by dividing total sales by available inventory. High absorption rates indicate strong demand and a seller's market.

Key Points

Understanding absorption rate is essential for evaluating real estate investments
This concept helps investors compare opportunities objectively
Our Free Snapshot tool automatically calculates relevant metrics for any property

Related Terms

Days on Market (DOM)

The number of days a property has been listed for sale. Lower DOM indicates a hot market with strong demand. Higher DOM may indicate overpricing or weak demand, potentially creating negotiating opportunities.

Inventory

The number of homes available for sale in a market. Often expressed as months of supply—how long it would take to sell all current listings at the current sales pace. 4-6 months is considered balanced.