A market has 180 active listings and has been closing 30 sales per month. What is its months of supply, and what does it suggest?
Correct Answer
A) Six months — roughly balanced conditions
Why this is correct: Months of supply = Active listings ÷ Monthly sales rate = 180 ÷ 30 = 6 months. This indicates a roughly balanced market, as 5-7 months of supply is often considered equilibrium. Why the other choices are wrong: Six months is not severe seller's market (typically <4-5 months). One-fifth of a month would indicate extreme scarcity, not this calculation. Thirty months would indicate a deep buyer's market, not this calculation. Exam tip: Balanced market is typically around 6 months of supply.
Why This Is the Correct Answer
Why this is correct: Months of supply = Active listings ÷ Monthly sales rate = 180 ÷ 30 = 6 months. This indicates a roughly balanced market, as 5-7 months of supply is often considered equilibrium. Why the other choices are wrong: Six months is not severe seller's market (typically <4-5 months). One-fifth of a month would indicate extreme scarcity, not this calculation. Thirty months would indicate a deep buyer's market, not this calculation. Exam tip: Balanced market is typically around 6 months of supply.
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