How to read months of supply

CALHOUN, Ga. Months of supply asks one question: if no new listings came on and homes kept selling at the recent pace, how long would today's active inventory last? We divide the live count of active listings by closings. Homes under contract or pending are left out, because they are already spoken for.

We publish two versions. One divides by the latest official month of closings, which reacts quickly. The other divides by the average month over the last 12, which smooths out a slow or busy month. When the two land in different bands, the month was unusual, and that is worth knowing before you price a house or write an offer.

Our bands: under 4 months leans toward sellers, 4 to 6 months is balanced, above 6 months leans toward buyers. A balanced reading is not a seller's market, even when homes in a given price range are moving quickly.

This month's example

Fulton County shows how it works. With 5,597 active listings and 846 closings in October, it had 6.6 months of supply on the month's pace and 5.7 months on the 12-month pace.

For contrast, Cobb County had 4.8 months on October's pace.

Across the FMLS footprint, the figure was 6.1 months.