| Balanced Market Threshold | ~6 months of supply (National Association of Realtors general guidance) |
| Seller's Market Inventory | Under 6 months of supply |
| Buyer's Market Inventory | Over 6 months of supply |
| Appraisal Ordered By | Mortgage lender (not buyer or seller) |
| DOM Calculation Start | Date listing goes active on MLS |
| Comps Timeframe | Typically last 3–6 months of sales |
Why This Terminology Matters
The language of real estate can feel like a foreign dialect. Terms like absorption rate, months of supply, and comps appear regularly in market reports, agent conversations, and purchase contracts — and misunderstanding them can lead to poor decisions at high financial stakes.
This reference guide defines the most important housing market terms in plain language, organized to help you look up what you need quickly. Whether you're preparing to buy a home or trying to make sense of local price trends, these definitions give you a reliable foundation.
For a broader introduction to how all these concepts interact, see our first-timer's guide to the U.S. housing market.
Terms Vary by Region and Context
Real estate terminology is largely standardized across the U.S., but local customs, state laws, and individual contracts can give the same term slightly different meanings. Always review any term as it is used in your specific contract or market report. When in doubt, ask your real estate agent or attorney for clarification.
Core Market Condition Terms
Understanding whether you're operating in a buyer's or seller's market — and how to measure that — is the starting point for any real estate decision.
For a deeper look at how inventory levels drive these conditions, see our explainer on housing inventory and why it moves the market.
| Balanced Market Threshold | ~6 months of supply (National Association of Realtors general guidance) |
| Seller's Market Inventory | Under 6 months of supply |
| Buyer's Market Inventory | Over 6 months of supply |
| Appraisal Ordered By | Mortgage lender (not buyer or seller) |
| DOM Calculation Start | Date listing goes active on MLS |
| Comps Timeframe | Typically last 3–6 months of sales |
Pricing and Valuation Terms
Price is almost never a simple number in real estate. These terms describe how homes are priced, evaluated, and compared during a transaction.
6 months
Inventory level signaling a balanced market
Six months of supply is the widely cited benchmark used by real estate professionals to distinguish balanced from seller's or buyer's markets.
100%+
List-to-sale price ratio in competitive markets
When demand is high, homes frequently close at or above asking price, pushing the list-price-to-sale-price ratio above 100%.
Comparable sales — or comps — are the cornerstone of pricing decisions for both sellers setting a list price and buyers deciding what to offer. An appraisal serves a similar purpose but is performed by a licensed professional at the lender's request, and its outcome can directly affect whether a mortgage is approved.
The list price to sale price ratio is one of the clearest signals of how competitive a local market is at any given moment. For a detailed look at how to read these indicators in a published report, see how to read a housing market report.
To understand what drives affordability alongside these pricing metrics, see our overview of housing affordability and why it matters. For transaction-specific terms like escrow and title insurance, the homebuying terms reference is a useful companion to this guide.