One method for assessing the activity of the housing market is by calculating the absorption rate. The rate is determined by dividing the current number of active listings by the average number of homes selling each month. The resulting figure shows the number of months it would take to sell the existing inventory of active listings. A normal or balanced market would have a five to six month supply of homes. A seller's market, reflecting a limited number of homes for sale, would have a one to four month supply. A supply time of seven months or more would indicate a buyer's market.
Supply Time Market Description
1 to 4 months Seller's Market
5 to 6 months Normal Market
7 months or more Buyer's Market
Using the preceding twelve months as a determinant for calculating average monthly sales, the current absorption rate for Westport single-family homes is 8.8 months. According to the above chart, this would indicate that Westport is currently in a Buyer's Market. However, as the case with most averages and generalizations, they rarely tell the whole story.
Analyzing the data by price point gives a clearer picture of market activity. The overall absorption rate for homes listed at $1 million or less is 4.6 months. While a few price ranges in this segment have supply times above a normal market, there is generally limited inventory, creating a seller's market at the lower end. At the same time, there is an abundance of inventory for homes in the higher price points. There is a two and a half year supply of homes selling at $2.5 million or more. The absorption rate for listings priced $4 million or more is thirty-nine (39) months, or over three years.
This data is compiled from the Consolidated Multiple Listing Service and may not always be accurate. No warranty is made as to the accuracy of this information. You should verify any information that is important to your buying.
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