Definition of "Market absorption rate"

Joye Holverson real estate agent

Written by

Joye Holversonelite badge icon

Cypress Realty Inc.

The rate at which a market can absorb additional units of supply without causing market saturation and severe price distortions. For example, during a recessionary period, many homeowners may list their house for sale. Since the supply of homes entering the home resale market increased without a corresponding increase in demand, the market absorption rate has been exceeded, and the market price of the resale homes declines.

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