Why Tracking the Activity Index and Months of Inventory is Crucial in the Austin Real Estate Market
Published | Posted by Dan Price
AUSTIN-TX : April 10 2023 : Staying on top of the latest market trends and metrics is crucial to providing clients with the best possible service. Two of the most important metrics to track are the Activity Index and Months of Inventory.
The Activity Index, also known as the Absorption Ratio, is a metric that shows the level of absorption in the market. It is calculated by dividing Pending Sales by (Pending Sales + Active Listings) and expressing the result as a percentage. Currently, the Activity Index for the Austin market is 34.66%.
Months of Inventory is another important metric to track. It represents the number of months it would take to sell all the current listings at the current sales pace. Currently, the Months of Inventory for the Austin market is 4.09.
The one-month trendline shows that the Activity Index is increasing, indicating a rise in demand for real estate, while the Months of Inventory are decreasing, further confirming this trend. This could be attributed to seasonal factors, lower interest rates, and buyers taking advantage of price drops that have occurred in the past 3 to 6 months. Notably, 48.3% of the 9,780 active listings have experienced a price drop.
In a seller's market, the Activity Index tends to be high, as there are more buyers than there are homes for sale. In a buyer's market, the Activity Index tends to be low, as there are more homes for sale than there are buyers. By tracking the Activity Index over time, brokers can get a sense of where the market is headed and adjust their strategies accordingly.
By tracking the Activity Index and Months of Inventory together, brokers can get a more comprehensive view of the market conditions. For example, a high Activity Index and low Months of Inventory would indicate a strong seller's market, while a low Activity Index and high Months of Inventory would indicate a weak buyer's market.
If you're interested in staying up to date on the latest market trends in the Austin area, we recommend visiting our Active Residential Listings page for daily, up-to-date information on new listings. You can access that page by going to Insights (on the top menu) and then click on on Active Residential Listings. By staying informed, you can make more informed decisions when it comes to buying or selling a home.
Request Info
Have a question about this article or want to learn more?
