Absorption rate in reports is “misleading,” one analyst says

November 20, 2014

According to Bloomberg View real estate reporter Jonathan Miller, the rule of thumb that “a six month absorption rate is a healthy real estate market” is misleading.

 

“The six-month benchmark incorrectly indicates that all U.S. markets are the same and infers that a lower absorption rate is better than a higher rate,” Miller writes. However, he noted that for more than half of the past 15 years the absorption rate has been lower than the six-month threshold, but it wasn’t a sign of a “healthy” market.

 

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