The Absorption Rate is the study of how many months supply of housing is currently on the market in a given market area. Today I am studying East Nashville’s Lockeland Springs, 37206’s premier neighborhood (well among a few others too).

Currently in the multiple listing service for Lockeland Springs there are 26 active listings in all price ranges. In the past year there have been 56 sales in Lockeland Springs. So if only 56 houses closed in the last year–what does 26 active listings mean? Take 56 and divide by number of months in a year and you get 4.66 closings per month in the last year in Lockeland. Take the 26 current listings and divide by 4.66 and you see that there is a 5.5 month supply of housing on the market. That means even if nothing else came on the market, it would take 5 1/2 months for the market to “absorb” the housing inventory.

Generally speaking in America if we are under a six month supply, it is deemed a Seller’s market. This is counter intuitive to what I am experiencing right now. I believe the data is skewed to not include the expired and withdrawn listings from the market. If we look at the same time period since last year, there were 86 houses that did not sell and were withdrawn from the market or the listing period expired. If you balance these houses that did not close to the ones that did–you see that 65% of the houses placed on the market in the last year did not even sell.

So while we have a 5.5 month supply of houses–the ones that did sell were on the market for an average 71 days. So it is very possible to sell right now. One must have it priced correctly and staged to be “in the market”. Otherwise one will end up as part of that 65% that lingers and withers on the vine.