Kitsap County’s Absorption Rate Defined

Absorption rate is defined as the time needed for the market to consume the existing inventory of homes for sale.  I compute absorption rate weekly by dividing the total number of active listings for an area (or neighborhood, or style of home) by the number of closed sales for that particular week.  I compare this with the number of newly pended homes for that week.

I believe absorption rate is much more sensitive to changing market conditions than any of the other indicators.  And using this calculation I can generally predict a change within three to four weeks of its occurance.

Absorption lets us know what’s happening in our markets today.