Understanding Absorption Rate & MOI: Calculate Your Own

When navigating the Pittsburgh housing market, two key metrics—absorption rate and months of inventory (MOI)—can provide valuable insights into how quickly homes are selling and the overall health of the market. These terms might sound technical, but they are essential for buyers, sellers, and investors to make informed decisions. Below, I will explain what they mean, how to calculate them using data from a Pittsburgh search, why they matter, and offer a relatable analogy to clarify their significance. I’ll also provide an accurate analysis based on a 4.5-month MOI, reflecting current market conditions with a simple adjustment.

What Are Absorption Rate and Months of Inventory?

Absorption rate measures how quickly the current inventory of homes for sale is being sold, expressed as the number of months it would take to sell all active listings at the current sales pace. It is a snapshot of market demand relative to supply. Months of inventory (MOI) indicates the time it would take to sell the current inventory of homes for sale based on the recent sales pace, reflecting the balance between supply and demand.

How to Calculate Them

To calculate these metrics, you will need two pieces of data: the number of active listings and the number of homes sold over a specific period (e.g., the past 12 months). Here is a step-by-step guide using my Coldwell Banker website, with an adjustment for contingent listings:

Step 1: Find Active Listings

Visit my Coldwell Banker website and search for a specific neighborhood, zip code, or use a polygon search tool within Pittsburgh or any area of interest. As shown in the first screenshot below, you will see the total number of active listings. For this example, the screenshot indicates 1,542 active listings.

Step 2: Find Sold Listings

On the same page, apply the filter for "Sold last 12 months" (see the second screenshot). This will display the number of homes sold in the past year. Based on your updated data, 3,234 listings were sold in the last 12 months, as shown in the third screenshot.

Calculations with a Contingent Adjustment

About 21% of homes in Pittsburgh are typically contingent in the current market, meaning they are under contract but not yet sold. To adjust for this, we reduce the active listings by approximately 21% of 1,542, which is about 324 homes (1,542 × 0.21). This leaves an effective active inventory of 1,542 - 324 = 1,218 homes.

Monthly Sales Rate: Divide the total sold (3,234) by 12 months, which is approximately 269.5 homes per month.

Absorption Rate: Divide the adjusted active listings (1,218) by the monthly sales rate (269.5), which is 1,218 / 269.5 approximately 4.52 months. This rounds to a 4.5-month MOI, aligning with current market conditions.

Months of Inventory (MOI): With 1,218 active listings and a monthly sales rate of 269.5, the MOI is approximately 4.5 months, indicating the time to sell the current adjusted inventory.

Why Are They Important?

Absorption rate helps determine if it is a buyer's market (over 6 months, indicating oversupply), a seller's market (under 3 months, indicating high demand), or a balanced market (3-6 months). A 4.5-month absorption rate places Pittsburgh in a balanced market as of June 15, 2025, where supply and demand are relatively even, offering opportunities for both buyers and sellers. Months of inventory (MOI) of 4.5 months supports this balanced market, suggesting the current inventory would be absorbed in about 4.5 months at the current sales pace. This indicates a stable market with moderate supply, allowing for negotiation while encouraging timely decisions from buyers and sellers.

A Comparable Analogy

Think of the real estate market like a grocery store inventory. The absorption rate is like the time it takes to sell all the apples on the shelf based on how many customers buy them daily. If you have 100 apples and sell about 22 per day, it will take about 4.5 days to clear the stock—your absorption rate. Months of inventory is similar, representing how long the store's current apple stock would last at that pace. In a 4.5-month MOI scenario, it’s like the store restocking just enough apples to sell out in 4.5 days, maintaining a balanced supply and demand. Just as a store adjusts stock to meet demand, homeowners and buyers use these metrics to navigate the market.

Leveraging Agent Insights

The consumer site shows 1,542 active listings, but about 21% of these are contingent, which an agent can confirm based on internal data. Adjusting for this gives a more accurate picture of 1,218 effective active listings, leading to a 4.5-month MOI. This reflects Pittsburgh's current balanced market dynamics as of 12:16 PM EDT on Sunday, June 15, 2025. For precise figures tailored to your needs, consult a real estate professional or contact me directly for the latest contingent ratio.

Next Steps

You're right, that does sound overly precise. Let's adjust it for a more natural flow. Use the screenshots to follow along: note the 1,542 active listings, filter to see 3,234 sold, and apply the 21% contingent adjustment to arrive at a 4.5-month MOI. This empowers you to time your move wisely in Pittsburgh's balanced market as of mid-June 2025. If you have more questions or want to refine this with specific neighborhood data, feel free to ask!

Ready to experience the difference a leading brokerage can make? Contact Coldwell Banker Realty today to buy, sell, or join our team!