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What is a Seller’s Market

A seller’s market is one in which there are more buyers than homes for sale. Since supply is less than demand, homes will be higher priced and more attractive to the sellers in the market. In contrast, a buyer’s market is one in which there are lots of sellers and relatively few buyers, which leads to lower prices. A market’s absorption rate is the best way to figure out whether a certain area is behaving as a seller or buyer’s market. The absorption rate is calculated by looking at how many homes sold in a certain month and divide it by the total number of homes for sale at the end of the month. An absorption rate of 20% or above is usually deemed a seller’s market since homes are selling relatively quickly and the number of months of supply is low.