The sales-to-active-listings ratio percentage is calculated by dividing the number of homes sold in a particular period by the number of active listings on the market at the end of that period and then multiplying the result by 100 to express it as a percentage. Mathematically, it is represented as:

Sales-to-Active-Listings Ratio Percentage=(Number of Homes SoldNumber of Active Listings)×100Sales-to-Active-Listings Ratio Percentage=(Number of Active ListingsNumber of Homes Sold​)×100

Interpretation:

• A ratio percentage greater than 100% indicates that there were more homes sold than there were active listings on the market during the period, suggesting high demand relative to supply. This typically signifies a seller's market, where competition among buyers is fierce, and sellers may have the advantage in negotiations.

• A ratio percentage less than 100% indicates that there were fewer homes sold than there were active listings on the market, indicating lower demand relative to supply. This often signifies a buyer's market, where buyers have more negotiating power and sellers may need to adjust their pricing or marketing strategies to attract buyers.

• A ratio percentage close to 100% suggests a balanced market, where supply and demand are relatively equal. In this scenario, neither buyers nor sellers have a significant advantage, and pricing and selling times tend to be stable.

Importance: The sales-to-active-listings ratio percentage provides valuable insights into market conditions and trends, helping buyers, sellers, and real estate professionals make informed decisions. For sellers, it helps determine pricing strategies, timing for listing their homes, and expectations for the selling process. For buyers, it provides insights into competition levels, negotiating power, and market trends, aiding in the decision-making process.

Limitations: While the sales-to-active-listings ratio percentage is a useful indicator of market dynamics, it is important to consider other factors that may influence real estate activity, such as interest rates, economic conditions, demographic trends, and seasonal fluctuations. Additionally, variations in property types, neighborhoods, and price ranges can impact the interpretation of the ratio, so it's essential to analyze it in conjunction with other market indicators for a comprehensive understanding of market conditions.

In summary, the sales-to-active-listings ratio percentage is a valuable metric for assessing the balance between supply and demand in the real estate market and can provide valuable insights for buyers, sellers, and industry professionals alike.

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