how to calculate months of inventory in real estate

Best answer

Divide the number of active listings by the number of salesto determine the number of months of inventory remaining. As a general rule,5 to 6 months of inventory is considered to be a normal or balanced market. Over 6 months of inventory and we have buyer market.

People also ask

  • What are months of inventory and how are they calculated?

  • Months of Inventory calculates the number of homes currently on the market with the currently sold homes and gives us a number of months it would take to sell those homes that are currently on the market. If the Months of Inventory are low, this is a great sign that it is a good market.

  • How do you calculate inventory in real estate?

  • Inventory is calculated monthly by taking a count of the number of active listings and pending sales on the last day of the month. If inventory is rising, there is less pressure for home prices to increase. In December 2020, inventory was at 1,070,000 active properties listed on the market. This is down 16.4% from November 2020 (1,280,000).

  • How do you calculate months of supply in real estate?

  • 1 Identify the number of active listings on the market within a certain time period. … 2 Identify how many homes were sold or pending sale during that same time period. 3 Divide the active listings number by the sales and pending sales to find months of supply.

  • How much inventory does it take to sell a house?

  • Months of inventory is 500 divided by 125, or 4. That means that, if no new homes are listed, it would take four months for the homes currently on the market to sell.

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