After talking to people about my last post on Absorption Rates and the lack of a correlation between slower absorption and lower median prices (or faster absorption and higher prices), I got the impression that there was some curiosity — skepticism? — about the underlying numbers. So I thought a post mortem of sorts was in order. Here’s a chart that simply tracks total listings and total sales over a little more than the two years covered by the Absorption Rate chart.
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Revised Absorption Chart, but the results are the same, only worse
Thanks, Jean-Claude for making me take a second look at my methodology on my Absorption Chart. I had anticipated your point about the lag between listing dates and sales but had unfortunately gotten the formula backwards in my chart — basically dividing inventory by lagging sales, rather than forward sales: moral of the story: don’t do this stuff at 1 in the morning.) So I redid the chart with the correct formula inserted. (Excel groupies its =4*(AVERAGE(listings month 1, 2, 3)/AVERAGE(sales months 2, 3, and 4)). The data points at the end of the chart are averaged over shorter periods due to the lack of forward data. ...