Realtors use an analysis called Months of Inventory to evaluate the real estate market.

The Months of Inventory is equal to how long it would take to sell the existing inventory if no new houses were put on the market.

 

Seller’s Market 

When the Months of Inventory is below four months, realtors call it a seller’s market because the supply is relatively low so sellers have a stronger position in negotiations between a buyer and a seller.

 

 

Buyer’s Market 

When the Months of Inventory is above seven months, realtors call it a buyer’s market because the supply is relatively high and buyers have a stronger position in negotiations.

 

Normal Market

Months of Inventory between four and seven is considered a normal market with a good balance of buyers and sellers.