A three-month pace example
Suppose a fictional area has 120 active homes on September 30 and 90 closings during July through September. Its three-month average is 30 closings per month. Dividing 120 by 30 gives four months of supply. This is a scenario, not a finding about any Nashville county.
| Input | Value |
|---|---|
| Active at a single cutoff | 120 |
| Closed over three complete months | 90 |
| Monthly sales pace | 90 ÷ 3 = 30 |
| Implied months of supply | 120 ÷ 30 = 4.0 |
What can change the answer
Count active listings once at the cutoff, rather than adding daily snapshots. Define treatment of contingent, pending and temporarily unavailable listings. Use consistent boundaries in the active and closed sets. If the pace is zero, report undefined rather than zero months. A seasonal burst of closings can lower the ratio without a comparable change in available choices.
Freeze the inventory date and the sales window
Record the active-inventory timestamp and the exact months included in the closing count. Preserve the formula and any property-type exclusions with the output. A different seasonal window can change the pace even when the inventory count stays fixed. Compare like geography and property types before treating a change in the ratio as a change in market conditions.
Sources & further reading
- CFPB determine a comfortable home budget checked 2026-09-26
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