The absorption rate is a real estate metric that indicates how quickly homes are sold in a specific market over a given period. It is calculated by dividing the number of homes sold by the total number of homes available for sale. A higher absorption rate suggests a strong demand for properties, while a lower rate may indicate a sluggish market. This rate helps buyers and sellers make informed decisions. For instance, a high absorption rate can signal a seller's market, where competition drives prices up. Conversely, a low absorption rate may suggest a buyer's market, where buyers have more negotiating power.