What Does "Months of Inventory" Actually Mean?
IntroductionIf you've ever heard your realtor say, "We’re in a balanced market with 4.5 months of inventory," and nodded without fully understanding—this post is for you.What is Months of Inventory?
MOI measures the number of months it would take to sell all current listings if no new homes were added. It's a vital metric for determining whether we’re in a buyer's or seller's market.How It’s Calculated:
Total number of active listings ÷ Number of sales per month = Months of Inventory
What the Numbers Mean:
- 0–3 MOI: Seller’s market (low supply, high demand)
- 4–6 MOI: Balanced market
- 6+ MOI: Buyer’s market (high supply, low demand)
- Condos: ~4.5 MOI = Balanced market
- Detached Homes: ~6 MOI = Shifting toward buyer’s market
- Predicts price trends
- Helps set buyer/seller expectations
- Impacts negotiation power
- A sudden drop in MOI suggests upcoming bidding wars.
- A spike often precedes price reductions.
MOI is like a weather report for real estate. Pay attention to it, and you’ll avoid being caught in a market storm.
For more insights on terms and commonly used sayings in real estate just jump on the phone with me. I have all the slang and insider insights you need.
Sincerely,
Kevin LynchRemax Crest Realty778-718-5686