# Absorption Rate

*Real Estate — Finicade finance glossary*

Absorption rate measures how fast available properties sell in a market, usually expressed as months of inventory. Under roughly six months is conventionally a seller's market and above it a buyer's. It's the cleanest read on local negotiating leverage, and it moves well before prices do — inventory builds for months before asking prices start to fall.

**Formula:** `Months of inventory = Listings available ÷ Sales per month`

**Also known as:** months of inventory, market absorption

**Related terms:** [Vacancy Rate](https://finicade.com/glossary/vacancy-rate), [Comparative Market Analysis](https://finicade.com/glossary/comparative-market-analysis), [Multiple Listing Service (MLS)](https://finicade.com/glossary/multiple-listing-service), [Supply and Demand](https://finicade.com/glossary/supply-and-demand), [Housing Starts](https://finicade.com/glossary/housing-starts)

Source: https://finicade.com/glossary/absorption-rate