# How do you calculate inventory months in real estate?

Contents

## What is real estate months of inventory?

Months of Inventory (MOI) is the relationship of sales pace to the number of properties currently on the market if no additional homes were added to the supply. It is calculated by determining the number of homes sold per month and dividing by the total number of properties for sale on the last day of the month.

## How are real estate inventory levels calculated?

Inventory is calculated monthly by taking a count of the number of active listings and pending sales on the last day of the month. If inventory is rising, there is less pressure for home prices to increase. In December 2020, inventory was at 1,070,000 active properties listed on the market.

## What does months of housing supply mean?

The months’ supply is the ratio of houses for sale to houses sold. This statistic provides an indication of the size of the for-sale inventory in relation to the number of houses currently being sold.

## How is housing supply calculated?

Months of supply is the number of houses currently for sale divided by the average number of homes sold per month. Let’s look at a few examples. In the past 12 months 139 single family homes sold in the Leavenworth area. If we divide 139 by 12 we get an average of 11.58 homes per month.

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## What is inventory in real estate?

Inventory is the number of properties sold over the past four quarters divided by the current stock on market (SoM) HtAG measures the Inventory levels in quarters. Inventory levels define how absorbent real estate markets are of new listings.

## Which month has most house inventory?

According to the same data set, August has the most price cuts, while inventory levels are still healthy. In 2016, price cuts were most common between July and September. Additionally, August is the final month in the time span where listings are most abundant nationwide. Peak inventory falls between June and August.

## Is real estate considered inventory?

Real estate can indeed be a capital asset, but often it is classified as inventory, which by definition is not a capital asset. Any gain on inventory sales is business income, taxed at ordinary tax rates, not capital gain tax rates.

## Why is there no real estate inventory?

Why is low inventory pushing up prices? This housing shortage is the result of a few key factors according to Cororaton. Strong demand, fewer people listing their homes, unfavorable zoning regulations in many cities and a lack of skilled laborers have all combined to squeeze the real estate market.

## How do you calculate monthly stock?

To calculate months of inventory, follow these steps:

1. Identify the number of active listings on the market within a certain time period. …
2. Identify how many homes were sold or pending sale during that same time period.
3. Divide the active listings number by the sales and pending sales to find months of supply.
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## How many months of housing inventory is a balanced market?

Generally, a balanced market will lie somewhere between four and six months of supply.

## What is considered a balanced real estate market?

In a balanced real estate market, there should be around a six-month supply of homes. When inventory supply exceeds six months, it typically means the market is starting to slow because there are more homes than there are buyers.

## How many days on the market is considered a balanced market?

An average amount of time for a house to stay on the market in neutral conditions is around 30 to 45 days. Neutral real estate markets are balanced. Typically, interest rates are affordable and the number of buyers and sellers in the marketplace are equalized.