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.
