One of the ways that real estate brokers and housing analyst determine whether it is a buyer's or seller's market is through absorption rates.  

It is the rate at which available homes are sold in a real estate market during a given time period. 

The number is simply calculated by dividing the total number of available homes by the average number of sales per month. The figure shows how many months it will take to exhaust the supply of homes on the market. In theory, if no more homes were permitted to come on to the market, it would take X amount of time before all the homes are sold. 

To put things in perspective:

• “Normal Market” conditions exist when Absorption Rate is (5-7 months)
• “Sellers Market” conditions exist when Absorption Rate is lower. (1-4 month)
• “Buyers Market” conditions exist when Absorption Rate is higher. (7+ months)

A high absorption rate may indicate that the supply of available homes will shrink rapidly, increasing the odds that a homeowner will sell a piece of property in a shorter period of time, where a low absorption rate benefits buyers as there is a large inventory of homes competing for a smaller pool of buyers. 

Data from the past six months reveals that we remain in a buyer's market as the absorption rate remains above seven months. 

When we look back at a year ago, we see that there has been a slight improvement as the absorption rate overall has moved below 10 months when we look at the towns as a whole. 

So what does this all mean?  At least for the short term, it is still a buyer's market but we are moving in the right direction, be it gradually.  Towns like Madison and Chatham are becoming more balanced markets as Morristown, Morris Township and Morris Plains still remain as good opportunities for buyers especially with the current interest rates.  As the trend appears to be moving in the other direction, it seems likely that we have hit to bottom for homeprices. 

For homeowners sitting on the sidelines to sell, while things are starting to move toward a balanced market, it may be a very long wait until home prices start to improve and we see the signs of a "sellers' market."