
What is an Absorption Rate; How is it Related to Housing Inventory?
Absorption rate is a mathematical calculation used in various business applications. In real estate, absorption rate is a very important calculation to help understand the rate at which the market absorbs or eliminates housing inventory. Said another way, it measures how fast or slow homes are trading between buyers and sellers. Absorption rate is an important measurement I use when working with buyers and sellers. It helps my buyers understand market velocity and how that velocity is impacting home purchase terms. Likewise, the calculation is one of the factors used with my sellers to position and price a home for sale. Absorption rate is calculated by taking the number of homes ava...