Months of inventory is one of the most important indicators in real estate. It helps buyers and sellers understand market speed, competition levels, and how much leverage each side has during negotiations.
Months of inventory measures how long it would take for all current homes on the market to sell if no new listings appeared. A market with fewer than three months of inventory is considered a seller’s market because demand is stronger than supply. Prices tend to rise and homes sell quickly.
A market with four to six months of inventory is balanced. Both buyers and sellers have opportunities to negotiate fairly. Homes sell at a steady pace, and pricing strategies must be precise.
A market with more than six months of inventory indicates buyer advantage. More supply creates slower movement, longer days on market, and increased negotiation flexibility.
Understanding months of inventory at a neighbourhood level is essential. One area can be in a seller’s market while another is balanced or shifting. Detached homes may have higher inventory than townhomes or condos, which creates different dynamics within the same community.
Sellers use months of inventory to determine pricing, marketing strategy, and timing. Buyers use it to understand negotiation strength and market competition.
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