Months of Inventory (MOI) | Real Estate Glossary

Ryan Kelly

Months of Inventory

Months of Inventory (MOI)

Months of Inventory (MOI) is a crucial real estate metric that quantifies the number of months it would take to sell the current inventory of homes at the prevailing sales pace, assuming no new listings enter the market. MOI is a key indicator of market conditions, helping to determine whether the market favors buyers, sellers, or is balanced.

To calculate the MOI, you first determine the average number of properties sold over the past 90 days, which provides the most accurate reading by reflecting the most recent demand. Next, you take the total number of active listings and divide it by this average sales rate. This calculation gives you a clear picture of how long it would take to deplete the current inventory based on recent sales activity.

Seller's Market: When there are less than 4.9 months of inventory (approximately 147 days), the market is considered to favor sellers. This indicates high demand relative to supply, often leading to quicker sales and potentially higher prices, as buyers compete for limited available homes.

Neutral Market: A neutral market occurs when there are between 5 and 6.9 months of inventory (150 to 207 days). In this balanced scenario, neither buyers nor sellers have a distinct advantage, and the market conditions are stable, with a steady pace of transactions and moderate price changes.

Buyer's Market: A buyer's market is characterized by more than 7 months of inventory (210+ days). This suggests an oversupply of homes relative to demand, giving buyers more negotiating power and potentially leading to longer listing times and downward pressure on prices.

MOI serves as a valuable tool for real estate professionals, buyers, and sellers alike, offering insight into the current market dynamics and guiding strategic decisions. By analyzing the MOI, stakeholders can gauge the competition level in the market, adjust pricing strategies, and anticipate shifts in market conditions based on the most up-to-date data.

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