Example of Absorption Rate Calculation - Let's say that we take the number of settled sales for the last six months in a certain area, and it is 120. We then check the current number of active listings, and it is 520 in that area. First, divide the 120 sales by 6 months, to get a rate of 20 closings per month. Then, divide the 520 active listings by 20 to arrive at 26 months to move that inventory; that's the absorption rate.
