This article utilizes Absorption Rate, a key market indicator found in the Monthly Market Reports, to highlight existing single-family housing conditions in the Greater Albuquerque market areas. The data used for this Number Crunch article will be for single-family, detached homes that are for sale now and for listings that were reported sold in the last year.
Definition of Terms:
Absorption Rate (AR) – The absorption rate measures how long it will take to exhaust the current housing inventory. An average market is traditionally a six-month supply. The rate is refered to as MSI, Monthly Supply of Inventory.
How SWMLS calculates the Absorption rate:
The absorption rate calculation is the number of active listings divided by the monthly sales average. An example explaining how January’s 8.37 AR was calculated as follows.
We’ll start with the Active listings. There were 4,766 Active detached listings for January. This number was obtained from a Feburary 5th data pull. Active listing counts for monthly reports are typically obtained on the 5th day of the following month.
Now for the monthly sales average. In order to determine this average we need to look at 12 months worth of monthly homes sales, that’s 12 sales values divided by 12. The January 2010 sales average was 596.17. Another way of saying it is from February 2009 to January 2010 an average of 596.17 homes sold (per month) in the Greater ABQ Market.
The calculation for the January absorption rate is going to be 4,766 / 596.17. It will take 8.37 months to exhaust the current supply of homes for sale.
The absorption rate for detached homes, since Sept. 2009, has stayed between 8 and 10 months. A traditional market is considered to have a 6.0 absorption rate.
Here is a breakdown of all Active listings for sale in the Greater Albuquerque Market Areas and they’re corresponding Absorption Rates (as of July 9, 2010). Absorption rate data will differ slightly from the AR rate dispayed on the Monthly Market Reports. This is due to late entry of closed listings that have occured in the last 12 months.
Monthly Supply for listings for Bernailillo County
* N/A for Area 112 due to no sales in the last 12 months.
**For the Bernalillo County areas the highest AR is in Area 100. This area has averaged 11.17 sales a month in the last 12 months and had an inventory of 172 homes on the day of this data calculation.
Monthly Supply for listings for Sandoval County
Monthly Supply for listings for East Mountains and Estancia Basin
*Areas 231 and 293 show a skewed number, with values over 96 for the month’s supply of inventory. These values are high due to a low sales average and a small active inventory of homes for sale.
