What is Absorption Rate?

Absorption Rate is a way of measuring how quickly properties, on average, are selling in the current market. It is similar in purpose to Average Days on Market (the average number of days it is taking for properties to sell), but is better for most purposes, because it uses more timely data.

Absorption Rate is the number of properties currently on the market divided by the number of properties sold in the last 30 days (or sometimes the last month is used, even if it is not exactly 30 days). Another way to think of it is the number of months of inventory currently on the market (at the sales pace of the last 30 days).

Generally, an Absorption Rate of 1.8 to 3.5 is considered a Balanced Market. Less is a Seller's Market. More is a Buyer's Market.

Absorption Rate is a more timely indicator of the market than "Days on Market" (DOM) because the data used is only 30 days old at the most, whereas Days on Market uses data that spans many months, especially if it's a slow market.

Current Absorption Rate in Calgary: