There should be a direct cause and effect between Months of Inventory and Days on Market (i.e., more inventory –> longer time on market).
Days on Market is a popular statistic used by agents when talking to sellers, so it has some historical usage. Unfortunately, though the use of average days on market was probably pretty accurate for the previous 5 years because sales were fast paced and homes would go in the first listing, that is no longer true, and the statistic calculated by the real estate groups is woefully in error now.
I think Months of Inventory is a really good statistic for many reasons. Inevitably, sellers will ask, “How long will it take to sell?” One could respond, “There are 17 months of inventory, so average Market Time should approach 8.5 months.” (It’s not clear how close it will get to MOI/2 because many homes are withdrawn after 6 months.) What I like about MOI is that it allows future projections of market activity based on current inventory and recent sales. It just seems to me to be a better number. It’s just not as consumer friendly.
Meanwhile Median Days on Market that I’ve calculated is around 120 days for the entire population, but I plan to see how this calc falls out when I break it into above $1M and less than $1M, which is, more or less, where the Months of Inventory jump occurs.
