Are you trying to figure out if now is a good time to buy or sell in Plano? One simple number can help you read the market quickly: absorption rate. When you understand how fast homes are selling compared to what is available, you can time your move, set the right price, and write stronger offers. This guide breaks down what absorption rate means, how to calculate it for Plano, and how to use it alongside months of inventory to make smart decisions. Let’s dive in.
What absorption rate means
Absorption rate measures how quickly homes are selling relative to current supply. It helps you see demand vs supply at a glance.
There are two common ways to discuss it:
- Absorption rate: sales in a period divided by active listings now.
- Months of inventory (MOI): active listings now divided by average monthly sales.
Both tell the same story, but MOI is often easier to visualize. For example, 3 months of inventory means it would take about 3 months to sell all current listings if no new homes came on the market and recent sales pace continued.
The formulas you’ll use
Here are the standard calculations used by real estate pros, including our team and local MLS reports:
- Absorption rate (per month) = Sales in the last 30 days ÷ Active listings now
- Months of inventory (MOI) = Active listings now ÷ Sales in the last 30 days
- Alternative smoothing for thin segments: MOI = Active listings now ÷ (Sales in last 90 days ÷ 3)
Example only: If Plano had 600 active listings and 200 sales in the last 30 days, absorption would be 200 ÷ 600 = 0.33 (33 percent per month), which equals roughly 3 months of inventory. Always use a current, date-stamped snapshot for real decisions.
Why it matters in Plano
Absorption rate and MOI translate market speed into plain language. That is especially useful in Plano, where market conditions can shift by season and by price band.
- Spring tends to run faster in North Texas, which raises absorption and lowers MOI. Late fall and winter usually slow down.
- Entry-level and mid-range homes often sell faster than upper-tier segments because the buyer pool is broader. Luxury segments may carry higher MOI.
- Micro-markets inside Plano can behave differently. Your price range and neighborhood will shape the numbers you see.
How to calculate it for Plano
You can pull a quick read on the market with a short checklist:
- Define your geography: Plano city limits or specific ZIP codes.
- Choose a time window: 30 days for a current snapshot, 90 days to smooth smaller segments.
- Gather counts: active listings now and closed sales during your window.
- Do the math with the formulas above.
- Repeat by price band to see where the market is hottest or coolest.
Tip: Use a 90-day window for luxury or very specific price bands to avoid noisy, thin data.
Label your numbers clearly
If you share figures, always include the date and the source for transparency, such as “Active listings snapshot for Plano from the local MLS, accessed MM/DD/YYYY.” Closings lag pending contracts by about 30 to 60 days, so pair MOI with pending sales and days on market to confirm the trend.
Reading months of inventory: quick benchmarks
These industry-standard ranges help you interpret Plano’s MOI:
- Under 3 months: Seller’s market. Faster sales and firmer pricing.
- Around 3 to 6 months: Balanced market. Negotiation power is more even.
- Over 6 months: Buyer’s market. Longer selling times and more room for concessions.
Use these as guidelines, not absolutes. Different segments can have different “normal” readings.
What it means for sellers
Your pricing and prep should reflect the current MOI in your price band:
- MOI under 3 months: Price competitively near market value and expect quicker traffic. Prepare for multiple-offer scenarios and aim for strong presentation from day one.
- MOI 3 to 6 months: Slightly undercut nearby competition or lean into standout marketing, staging, and professional visuals to create urgency.
- MOI over 6 months: Price realistically, plan for a longer timeline, and budget for concessions or strategic price adjustments.
Monitor activity every week. If showings lag for 2 to 4 weeks in a low-MOI segment, revisit price, condition, and marketing.
What it means for buyers
Your offer strategy should match the market speed in your segment:
- MOI under 3 months: Get pre-approved, tour quickly, and consider flexible terms. You may see limited contingencies and quicker decision windows.
- MOI 3 to 6 months: You can negotiate reasonably on price and repairs while staying competitive.
- MOI over 6 months: Ask for closing credits or repairs and use full inspection and appraisal contingencies where appropriate.
Track pending sales and days on market. Rising pendings often signal a faster market ahead.
Price bands and micro-markets in Plano
MOI often changes sharply by price range. A simple way to see it is to split Plano into bands, such as under $300K, $300K–$500K, $500K–$800K, and $800K and above. You will usually find:
- Lower price bands: Lower MOI and quicker sales, especially for homes with popular amenities and convenient access.
- Upper price bands: Higher MOI, longer marketing windows, and more careful pricing.
Neighborhoods can vary based on housing stock, nearby amenities, and local demand patterns. Always compare like-for-like homes in size, age, and features for a fair read.
How MOI interacts with days on market and price
Absorption rate and days on market (DOM) move together most of the time. Faster absorption tends to mean shorter DOM. The list-to-sale price ratio adds context:
- Low MOI and short DOM with high list-to-sale price ratios suggests a very competitive segment.
- If MOI looks low but DOM is long, check for stale listings, price mismatches, or unusual inventory such as significant new construction options that may not show clearly in MLS counts.
Use all three signals together for a complete picture.
Seasonality in North Texas
Plano follows a familiar cycle. Activity usually ramps up from March through June, then cools in late fall and winter. That means absorption often rises in spring and dips later in the year. Compare today’s MOI to the same month a year ago to control for seasonal effects and see whether the market is heating up or cooling down.
Pendings, new construction, and other signals
A few additional indicators can sharpen your read:
- Pending sales: Contracts today become closings later. Rising pendings often point to higher absorption ahead.
- New construction: Builder inventory can live partly outside the MLS, which may understate supply. Keep an eye on permit trends and local builder activity.
- Mortgage rates and employment: These influence buyer demand and affordability, which can shift absorption across price bands.
Step-by-step plans you can use now
If you are selling in Plano
- Pull MOI for your price band using a 30-day window, and use 90 days if the sample is small.
- Align price with the benchmark ranges above and your competition.
- Elevate presentation with staging and high-quality visuals to capture demand early.
- Review showings, feedback, and pendings weekly, and adjust if momentum is not building as expected.
If you are buying in Plano
- Identify MOI in your target price band and neighborhood.
- Set search alerts and tour quickly when MOI is low.
- Structure offers to match the market speed, from flexible terms in fast segments to negotiated concessions in slower ones.
- Watch DOM trends and pending volume to spot shifts before they show up in closed-sale data.
Get a current Plano snapshot
Absorption rate changes quickly. The strongest decisions come from a fresh, date-stamped snapshot that matches your home or your search criteria. Our team can pull a precise read from the local MLS, break it down by your price band, and translate it into clear pricing or offer strategy.
Ready to see what the numbers say about your next move in Plano? Connect with the team at Niche Realty Group to get a current, tailored market read and a plan that fits your goals.
FAQs
What is absorption rate vs. months of inventory in Plano?
- Absorption rate measures sales in a period divided by current active listings, while months of inventory is the inverse and shows how many months it would take to sell current supply at the recent sales pace.
How do I calculate absorption rate for my Plano neighborhood?
- Gather active listings now and closed sales over the last 30 days for your specific area, then divide sales by actives for absorption or actives by sales for months of inventory, using 90 days to smooth thin segments.
What do specific MOI numbers mean for my Plano home price?
- Under 3 months suggests a faster-selling segment with firmer pricing, 3 to 6 months is balanced with normal negotiation, and over 6 months points to longer timelines and more concessions.
How does absorption rate relate to days on market and price?
- Faster absorption usually pairs with shorter days on market and stronger list-to-sale price ratios, while mismatches can signal stale pricing, niche inventory, or new construction not fully reflected in MLS counts.
How often should I check absorption rate when selling or buying in Plano?
- In a changing market, review it weekly to monthly; update more frequently in your exact price band if you are actively listed or preparing to write offers.
Does new construction in Plano affect absorption rate?
- Yes, because some builder inventory may be outside the MLS, which can make months of inventory appear lower than the total choices buyers actually have.
How do mortgage rates and local jobs impact absorption in Plano?
- Higher rates can slow demand and raise MOI, while strong employment can support demand and lower MOI, with effects varying by price band.
Where can I find up-to-date Plano absorption numbers?
- Ask your agent for a current, date-stamped MLS snapshot for Plano and your price band so you can base decisions on the most accurate, local data.
