The National Association of Realtors standard for a market in balance between buyers and sellers is a market where there is a 6 month supply of homes. The calculation is simple. Total sales within the preceding 6 month period divided by 6 then divided by the number of homes on the market.
This is just a fictitious example to illustrate the point. Let’s say you want to analyze houses in Amherst, Clarence and Orchard Park between $250K and $400K. Your computer search reveals that are 60 sales during the preceding 6 months. Therefore 60 divided by 6 = 10 sales per month.
You do another search to reveal there are 20 houses for sale between 250 and 400 in these areas. You do the math. 20 divided by 10 = a 2 month supply of homes in this category.
With the standard being 6 months, you can see this would be a strong seller’s market.
Here’s a sampling of actual data for Western NY – various areas and price ranges:
Upper West Side/Elmwood Village $200-500K – 2.28 month supply
Amherst $150-200K – 1.6 month supply
Amherst $300-500K – 5.3 month supply
Amherst $700K-1M – 11 month supply
Clarence $250-450K – 3.35 month supply
Clarence $500-700K – 8.38 month supply
Lancaster $200-400K – 6.38 month supply
Orchard Park $300-500K – 4.41 month supply
Orchard Park $700K-1M – 4.82 month supply*
*this data reflects sales reported up to 5/15/13 for the immediately preceding 6 month period.