Absorption rate is defined as the rate at which available homes are sold at a particular market in a given period. The absorption rate is calculated by dividing the number of homes that are traded over the given period by the number of homes and are still available for purchase. If your neighborhood contains houses for two dissimilar values, you’ll calculate the absorption rate for those that are still in your price range. A higher absorption rate implies that homes are being sold at an accelerated rate.
The formula of calculating Absorption Rate: –
Absorption Rate = Average number of sales per month / Total number of available properties
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