The absorption rate is a measure used in real estate to indicate how quickly homes are sold in a specific market. It is calculated by dividing the number of homes sold in a given period by the total number of homes available for sale. A higher absorption rate suggests a strong demand for properties, while a lower rate indicates a slower market. Understanding the absorption rate helps buyers and sellers make informed decisions. For instance, if the absorption rate is high, sellers may price their homes higher due to increased competition. Conversely, a low absorption rate may lead buyers to negotiate better prices.