The absorption rate provides insight into the real estate market letting us know the rate at which homes sell in an area over a period of time. In most cases, an absorption rate above 20% is associated with a seller’s market and an absorption rate below 15% is an indicator of a buyer’s market. Typically, you would calculate the supply over a specific period to access these sales trends.
Why are absorption rates important? Real Estate Professionals will consider the absorption rate when determining a listing price. If the absorption rate has increased, this means that there is a good demand and smaller supply. If the absorption rate has slowed then that means the supply is great, and the competition is higher, therefore, this may justify a
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