PS – Recall the equation for months of inventory. Take a sample period of time that is reflective of the current market, then find a monthly rate, then divide number of actives by that rate. So this method gives you a linear representation. However comparing that number to the actual number of pendings lets you check to see if this current market correlates well to the linear average.
The ratio of actives to pendings is 3 pendings and 52 actives. YIKES!! However taking a quick look at the MLS we see a total of 26 sales in the past 6 months. So that is 26/6 or 4.33 sales per month. So the correlation is not bad.
Yes I agree PS that not all escrows make it to solds so that is an important consideration. I just think that the months of inventory is a stat that could hide things so I like to bolster it with current statuses. The thing that the months of inventory hides is the fact that expireds, cancelled, and withdrawns that have dropped off the market ARE NOT ACCOUNTED FOR! So if you look at the current ratio of 3 pendings to 52 actives, at that rate it would take around 18 months to sell out! If you factor in that some pendings will never make it to solds it gets worse…
