Residential Market Analysis Practice Exam

Absorption rate here is about how fast homes are selling on a monthly basis. If there were 36 sales in the past year, you can find the average number of sales per month by dividing by 12: 36 ÷ 12 = 3. So, the monthly absorption rate is three homes per month.

The fact there are 12 properties currently on the market can be used for another related measure—months of inventory—by dividing current inventory by the monthly pace: 12 ÷ 3 = 4 months of inventory. But for the monthly absorption rate itself, the key calculation is 36 sales per year as 3 per month.