Put simply, the absorption rate is a measure of supply and demand. By taking the number of homes sold in a month and dividing it by the number on the market, you can find a percentage that determines how quickly homes sell.

How do you calculate absorption percentage?

The absorption rate is calculated by dividing the number of homes that sold over the given period of time by the total number of homes still for sale. The higher the rate of absorption, the faster homes are selling. So using my example above, the percentage of absorption is 12.4%.

Do you want high or low absorption?

The absorption rate compares the number of homes sold in a given period to the total number of homes on the market. An absorption rate of more than 20% is considered a seller’s market, while a rate of less than 15% is considered a buyer’s market.