What is “Months’ Supply”?

Months’ Supply is a measure of the balance between supply and demand in the market. It is calculated by dividing the number of active listings on the market at the end of the month by the number of sales over the course of the month. For example, suppose that 200 homes sold in a given month. If there were 1,000 active listings at that time, it would take 5 months at that pace of sales to exhaust the current supply of listings.

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