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Months of supply, explained: how to tell a buyer's market from a seller's market
The one number that settles the "is it a buyer's or seller's market?" argument, and how to calculate it for your own neighborhood in two minutes.
Months of supply is the cleanest single answer to "is this a buyer's market or a seller's market?" It measures how many months it would take to sell every home currently for sale if sales continued at the current pace and no new listings came on. NAR reported 4.8 months of supply nationally in September 2026, up from 4.5 a year earlier. That national number is useful context, but the version that wins listing appointments is the one you calculate for your own market.
The formula
Months of supply = homes for sale today ÷ homes sold per month
Example: a ZIP code has 84 active listings, and 168 homes closed there over the last six months, or 28 a month. 84 ÷ 28 = 3.0 months of supply.
How to read it
| Months of supply | Usually means | What clients feel |
|---|---|---|
| Under 3 | Strong seller's market | Multiple offers, few concessions, quick sales |
| 3 to 6 | Leaning toward sellers to balanced | Well-priced homes sell; overpriced ones sit |
| About 6 | Balanced | Negotiation on both sides |
| Over 6 | Buyer's market | Price cuts, concessions, longer days on market |
The 6-month line is a long-standing industry rule of thumb, not a law. Luxury and rural markets often run higher supply and still feel normal to the people in them.
How to calculate it from your MLS
- Search the area (subdivision, ZIP or city) and property type you care about. Count the active listings. Decide whether you include Coming Soon and say so.
- Search the same area for closed sales over the last 6 months (12 in slow or seasonal markets). Divide by the number of months.
- Divide active by monthly sales.
- Repeat it by price band. Supply is often tight under the median price and loose above it, which is what buyers and sellers actually experience.
Where it misleads
- Small numbers swing wildly. One subdivision with 4 listings and 1 sale a month reads as 4 months; one more sale makes it 2. Use a wider area or a longer window when counts are small.
- Seasons. Sales slow in winter, so supply looks higher in December than it is. Compare with the same month last year.
- Different sources, different counts. NAR's national figure uses its own inventory and sales estimates; your MLS count will not match it, and does not need to.
A faster cousin: the pending ratio
Realtor.com publishes a pending ratio, pending listings divided by active listings. It moves sooner than months of supply because it counts contracts, not closings. Nationally it was 0.36 in September 2026, down from 0.40 a year earlier. The U.S. statistics page shows the latest reading and every state's market.
Live U.S. numbers
Questions
Quick answers
What is months of supply in real estate?
How many months it would take to sell all homes currently for sale at the current monthly sales pace: active listings divided by homes sold per month.
How many months of supply is a balanced market?
About six months is the traditional balanced line. Under that tends to favor sellers; over it tends to favor buyers.
What was the national months of supply in September 2026?
4.8 months, up from 4.5 a year earlier, according to NAR.
Sources
- National Association of Realtors, “Existing-Home Sales Increased 1.5% in September, According to NAR Report,” October 13, 2026. www.nar.realtor
- Realtor.com Economic Research, “Residential Real Estate Data, U.S. monthly file (pending ratio), September 2026,” Accessed October 22, 2026. www.realtor.com
Figures are as published on the dates shown; the live numbers above update on their own.