Months Supply and Days On Market Explained

Understanding Months Supply of Inventory and Its Correlation with Days on Market

If you’ve been thinking about buying or selling a home, you’ve likely heard terms like “seller’s market” or “days on market” tossed around. But what do they really mean? And how do they affect your strategy as a buyer or seller?

In real estate, understanding market conditions is key—and two of the most important indicators are Months Supply of Inventory (MSI) and Days on Market (DOM). These two metrics don’t just offer insight into how fast homes are selling—they tell a deeper story about supply, demand, and timing. Whether you’re preparing to list your property or searching for your next home, having a clear grasp of MSI and DOM will help you make confident, informed decisions.

What is Months Supply of Inventory (MSI)?

MSI measures the number of months it would take to sell all current homes on the market, assuming no new listings are added and homes continue selling at the current rate. It essentially reflects the balance between housing supply and demand.

• Seller’s Market (MSI below 6 months): Fewer homes are available and demand is high. This typically leads to quicker sales and higher prices.

• Buyer’s Market (MSI above 6 months): More homes are on the market than buyers. This often results in longer sales timelines and more negotiating power for buyers.

• Balanced Market (MSI around 6 months): Supply and demand are fairly equal, leading to a more stable and predictable market.

What is Days on Market (DOM)?

DOM represents the number of days a property is actively listed before it goes under contract. It’s a strong signal of how quickly homes are moving in a particular market.

• Low DOM: Homes are selling fast, often due to high demand and limited supply.

• High DOM: Properties are taking longer to sell, which could point to an oversupplied market or overpriced listings.

How MSI and DOM Work Together

These two metrics go hand in hand and help paint a clear picture of the current real estate landscape:

• Low MSI + Low DOM: A strong seller’s market. Homes move fast, often with multiple offers and limited time to act.

• High MSI + High DOM: A buyer’s market. There’s more inventory, giving buyers room to shop around and negotiate.

• Balanced MSI + Moderate DOM: A stable market where neither side has a strong advantage—good news for buyers and sellers looking for predictability.

Why It Matters

For sellers, knowing the current MSI and DOM can help set realistic expectations when pricing and marketing a home. Pricing appropriately based on market demand can reduce your home’s time on the market and increase the chances of a competitive offer.

For buyers, these metrics can guide how aggressive you need to be. In a low MSI market, you may need to act quickly and submit strong offers. In a high MSI market, you might have more time and leverage during negotiations.

Final Thoughts

The housing market is always shifting, but keeping an eye on key indicators like Months Supply of Inventory and Days on Market can help you stay ahead of the curve. Whether you're entering a hot seller's market or navigating a more balanced one, these tools offer clarity in a competitive space.

And remember—having an experienced real estate team in your corner can make all the difference. If you're thinking about buying or selling, we’re here to help you interpret the market, develop a smart strategy, and make your next move with confidence.