New Listing to Pending Ratio
The New Listings-to-Pending Ratio—calculated as (Active Under Contract + Pending/Backup) ÷ (New Listings + Back-on-Market)—is one of the most effective measures of housing market absorption. A ratio below 1.0 means new supply is outpacing contracts and inventory is expanding, often favoring buyers. A ratio above 1.0 means absorption is exceeding new supply and inventory is shrinking, often favoring sellers. With a long-term historical average near 0.8, this metric provides clear context on whether the market is building or burning off inventory. By tracking this ratio consistently, agents gain forward-looking insight into pricing pressure, negotiation leverage, and overall market balance—making it an essential tool for listing strategy, buyer guidance, and investor analysis.
Interpreting the New Listing-to-Pending Ratio
The New Listings-to-Pending Ratio measures how quickly new supply is absorbed compared to new and back-on-market listings. Interpreting this ratio is easier when broken into ranges:
Below 0.50 – Very Cold Market (Strong Buyer Advantage): Extremely low absorption. Fewer than 50 homes go under contract for every 100 listed. Inventory grows rapidly, buyers hold all the leverage, and sellers face heavy competition.
0.50 – 0.60 – Substantial Inventory Growth: Market is soft, with a clear oversupply. Buyers can negotiate aggressively, and sellers must price sharply to attract attention.
0.60 – 0.70 – Tangible Inventory Growth: Inventory is building, but absorption is steady enough to keep the market moving. Still favors buyers, though less extreme.
0.70 – 0.85 – Neutral Market Zone: Balanced conditions. Inventory is relatively stable, with neither buyers nor sellers holding a clear advantage.
0.85 – 1.00 – Leaning Toward Sellers: Market begins to favor sellers. Inventory is tightening as pending contracts approach parity with new supply.
1.00 – 1.10 – Seller’s Market: Demand is outpacing new supply. Sellers can expect stronger offers, fewer concessions, and faster market times.
Above 1.10 – Strong Seller’s Market (Hot Market): Rapid absorption, with more than 110 homes going under contract for every 100 listed. Inventory shrinks quickly, multiple offers are common, and buyers compete aggressively.
Frequently Asked Questions
1. What is the new listing-to-pending ratio, and how is it calculated?
The new listing-to-pending ratio is a housing market indicator that measures how quickly new supply is being absorbed by buyers. It is calculated as: (Active Under Contract + Pending/Backup) ÷ (New Listings + Back on Market). A ratio below 1.0 suggests that more homes are entering the market than going under contract, causing inventory to grow. A ratio above 1.0 shows that demand is outpacing supply, leading to shrinking inventory. This ratio has a long-term average near 0.8, making it a reliable benchmark for forecasting whether the market is leaning toward buyers or sellers.
2. What does a new listing-to-pending ratio below 1 mean for the housing market?
A ratio below 1.0 signals that inventory is building. For buyers, this typically creates more choices and stronger negotiating power. For sellers, it often means longer marketing times, higher competition, and the need for sharper pricing or incentives. Tracking this ratio helps forecast market balance—agents can anticipate when conditions are shifting toward a buyer’s market and adjust strategies accordingly.
3. How do mortgage rates impact the new listing-to-pending ratio?
Mortgage rates directly affect buyer affordability, which in turn influences pending sales. Lower rates usually increase demand, drive more homes under contract, and reduce the ratio, tightening inventory. Higher rates can slow buyer activity, increase the ratio, and expand inventory. Because rates and buyer sentiment move together, monitoring this ratio alongside mortgage trends provides a clear forecast of housing demand and pricing pressure.
4. Why is open house activity important in understanding market trends?
Open house activity reflects buyer engagement in real time. When open house traffic is strong, it often precedes an increase in pending sales, which lowers the ratio and signals stronger demand. When activity softens, it can be an early indicator of slowing absorption and rising inventory. By pairing open house counts with the new listing-to-pending ratio, agents and clients gain a forward-looking view of buyer momentum and market direction.
5. How can the new listing-to-pending ratio be used to forecast housing market conditions?
Year-over-year changes in the ratio reveal whether supply is consistently outpacing demand or vice versa. A rising ratio points to growing inventory and potential price softening, while a falling ratio suggests tightening conditions and upward pricing pressure. By combining this ratio with other signals—such as price reductions, mortgage rate trends, and open house activity—agents and clients can forecast short-term and long-term shifts in the housing market. This makes the ratio one of the most useful tools for predicting buyer leverage, seller strategy, and overall market balance.
