Absorption Rate is often considered the best indicator of the health of a housing market. Simply put, it is figured by dividing the number of homes currently for sale by the average number of sales per month. The resulting figure shows how many months it will take to exhaust the supply of homes on the market. A six-month supply is considered a balanced market. Less than a six month supply of homes generally indicates a “Seller’s Market,” where conditions favor the home seller. Greater than a six month supply means a glut of inventory, which normally favors the buyer.
Roanoke’s Absorption Rate for November 2012 is 11.2 months. Still high, but at its lowest point since February 2009! The chart above goes back to January 2011, and shows the downward trend. A continuing downward trend would mean rising home prices and a better overall local real estate market. All figures are as reported to the Roanoke Valley MLS from 1/1/11-11/30/12.