Sellers Market: 1 to 4 months supply of homes
Neutral Market: 5 to 6 months supply of homes
Buyers Market: More than 6 months supply of homes
In a sellers market the seller can set the price, do minimal staging and the house will sell as there is very little inventory for buyers.
In a neutral market the seller will need to look at the competitors pricing and market and perform minimal staging.
In the buyers market the seller will need to price aggressively, offer buyer incentives such as home warranties and perform high levels of staging and updating.
Whether you are a buyer or seller knowing the absorption rate will assist you with determining real estate values for your market.