What is an Absorption Rate? 

Speaking from the real estate context, an absorption rate offers a percentage illustrating the amount of homes sold over a set period of time. We can use this figure to gauge whether a market is tipped in favor of the buyer or the seller. For simplicity’s sake, we’re going to be reporting the absorption rate on a monthly basis. And how do we find that figure? The formula is basic enough. To calculate absorption rate, we divide the total number of homes sold (over a month for our purposes) by the total number of homes on the market. 

According to Investopedia, a 20% absorption rate indicates a healthy seller’s market. In this kind of housing market, homes sell rapidly. An absorption rate below 15% indicates a buyer’s market in which homes often stay on the market for a lengthy amount of time. To simply put it, lower absorption rate indicates buyer's market and high absorption rate indicated seller's market. 

Based on the data collected from multiple listing services, we can calculate the absorption rate for 90210 (Beverly Hills) zip code in September 11 ÷ 160 = 6.9%.