Using Absorption Rate to Evaluate the Real Estate Market

Published 10 March 09 07:33 AM | Rusty Armstrong 
There are many things that can be looked at to evaluate the strength of the real estate market in an area but one that many economist and market readers use is the Absorption Rate. This is determined by looking at the numbers of homes that are selling over a period of time and then seeing how long it will take at that rate to sale all the homes that are on the market at a given time. For example if there has been 100 homes selling on average per month and there are 500 homes on the market, that would mean that the absorption rate would be 5 months. If there were 1000 homes that would be a 10 month absorption rate. When this rate is trending high the market is slowing down and trending lower means a better market. I will be reporting on how it is moving in the Little Rock area as we move forward this year.

Comments

# Rusty Armstrong said on June 5, 2009 3:07 PM:

This monthly report has been tracking the home sales trends in the most active areas of Little Rock,

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About Rusty Armstrong

Broker Owner of ERA Armstrong Team, REALTORS in Little Rock, Arkansas. After teaching and coaching in Texas, I enter real estate with my father-in-law Sam Reynolds in 1978. I work as a sales agent, sales manager, and broker for companies till starting The Armstrong Team, REALTORS in 1994 with business partner Jerry Ann Hill. We affiliated with ERA Franchise System 6 years ago. I have been active in the REALTORS Associaion and I am a past president of the Little Rock Board and local MLS. I have been active teacher and trainer of agents for over 20 years.