How to Read a Real Estate Market Like a Pro

When a client asks "Is now a good time to buy?" or "Should I wait to sell?", your answer shouldn't be a guess. It should be backed by data.

Here are the 7 indicators that tell you exactly what's happening in your market.

1. Months of Supply (Inventory)

This is the single most important market indicator. It tells you how long it would take to sell every active listing at the current pace of sales.

• 0-3 months: Strong seller's market. Prices rising, multiple offers common.
• 4-6 months: Balanced market. Fair conditions for both buyers and sellers.
• 7+ months: Buyer's market. Prices softening, more negotiation room.

How to calculate: Active listings ÷ closed sales per month = months of supply.

2. Days on Market (DOM)

Average days from listing to contract tells you how quickly homes are moving:

• Under 21 days: Hot market. Buyers need to act fast.
• 21-45 days: Normal market. Standard timeline.
• 45+ days: Cooling market. Pricing becomes critical.

Watch the trend more than the number. If DOM is increasing month over month, the market is cooling.

3. List-to-Sale Price Ratio

This reveals negotiation dynamics:

• 100%+: Sellers getting full ask or above. Multiple offer situations.
• 95-100%: Healthy market. Modest negotiation.
• Below 95%: Buyers have leverage. Expect price reductions.

4. New Listings vs. Closed Sales

Compare the flow of new inventory against absorption:

• More closings than new listings: Inventory shrinking, prices will rise.
• More new listings than closings: Inventory building, prices may soften.
• Equal: Market in equilibrium.

5. Price Per Square Foot Trends

Track median price per square foot over 6-12 months. This normalizes for home size and gives you the truest picture of price movement.

A rising price per square foot means genuine appreciation. A rising median price could just mean larger homes are selling.

6. Pending Sales (Under Contract)

Pending sales are a leading indicator — they tell you what closings will look like 30-60 days from now.

• Rising pendings = market accelerating
• Falling pendings = market decelerating
• Flat pendings = market stable

7. Interest Rate Impact

While you can't control rates, you need to understand their effect:

• Every 1% rate increase reduces buying power by approximately 10%
• Rate drops create demand surges (more buyers enter the market)
• Rate volatility creates urgency (buyers rush to lock in)

Putting It All Together

Create a monthly market snapshot for your farm area:

This table tells a clear story: the market is tightening, homes are selling faster and above asking, and prices are rising. It's a seller's market getting stronger.

How to Use This Data

Share your monthly market snapshot with clients, prospects, and your social media audience. Position yourself as the local market expert by providing data-driven insights, not opinions.

With CloserOS's Market Pulse tool, you can pull real-time market data powered by ATTOM and generate professional market reports in seconds.

Become the market expert in your area. Start free →