The most important real estate statistic to keep in mind is called the absorption rate, a fundamental measure that defines whether a housing market is hot or cool. It can be very important in deciding your approach as a potential home buyer or seller. First things first, however. What is an absorption rate?

### Calculating the Absorption Rate

The absorption rate is found by dividing the number of homes for sale by the number of homes sold. For example, if there were 100 hundred available homes in the month of September and 90 of them sold than the absorption rate would be 1.11. Real estate professionals interpret this rate as how long it will take a home to sell, in this example 1.11 months. Seems relatively simple, right?

A real-world variation makes this equation a little more complicated, but not much. Usually, the number of homes available for sale in the equation is based on a six-month window. Therefore, to sell real estate longmont co could mean the stock of available homes in a six-month period could be 300. This would represent the number of properties put on the market since April. With this new divisor in place, the new rate is found by dividing 300 by 90 to reach the true absorption rate of 3.33. Real estate professionals will say it would take 3.3 months to sell a home based on these numbers.

### Hot Market or Not-So-Hot Market

It’s a good idea to get a handle of this number, whether you are looking to buy or sell. It’s a barometer of how the real estate market is fairing and tells a lot about what you can expect. Basically, the lower an absorption rate the hotter a market. If it takes a shorter time to sells a home, the market has a lower absorption rate. Buyer and sellers will have to react certain ways to profit: