1. What is Months Supply of Homes?

Months Supply is a key real estate metric that measures how long it would take to sell all current active listings at the current sales pace. It indicates market balance between supply and demand.

2. How Does the Calculator Work?

The calculator uses the Months Supply formula:

Where:

• \( \text{Active Listings} \) — Number of properties currently for sale
• \( \text{Monthly Sales} \) — Number of homes sold per month

Explanation: This calculation provides insight into market conditions by showing how many months it would take to sell all available inventory at the current sales rate.

3. Importance of Months Supply Calculation

Details: Months Supply helps determine whether a market favors buyers or sellers. Lower numbers indicate seller's markets, while higher numbers suggest buyer's markets.

4. Using the Calculator

Tips: Enter the total number of active listings and the average monthly sales. Both values must be positive numbers greater than zero for accurate calculation.

5. Frequently Asked Questions (FAQ)

Q1: What is considered a balanced market?
A: Typically 5-6 months supply indicates a balanced market between buyers and sellers.

Q2: What months supply indicates a seller's market?
A: Less than 5 months supply generally indicates a seller's market with rising prices.

Q3: What months supply indicates a buyer's market?
A: More than 7 months supply typically indicates a buyer's market with potential price declines.

Q4: How often should this calculation be updated?
A: Monthly updates are recommended to track market trends and changes in supply and demand.

Q5: Are there limitations to this calculation?
A: This is a general indicator and doesn't account for seasonal variations, new construction, or withdrawn listings.