Days On Market And What The Median Hides

Days on market counts the time between a property being listed and going under contract. It is one of the most quoted market statistics and one of the most easily misread.

What the measure counts

The clock generally starts when a listing becomes active and stops when it goes under contract, which means the period between contract and closing is excluded.

Different data sources apply different conventions, particularly regarding listings that are withdrawn and relisted, so the same property can be reported very differently.

The measure is reported as a median more often than a mean, because a small number of very long listings would otherwise distort the average considerably.

Only completed sales are counted

The central limitation is that days on market describes properties that sold. Listings that expired unsold, or were withdrawn, do not enter the calculation at all.

In slower conditions, the properties that fail to sell are disproportionately the ones that would have shown long marketing times, which removes them from the statistic.

The result is that the measure can understate how difficult selling has become, because the hardest cases are the ones excluded from it.

Relisting resets the count

A listing that is withdrawn and re-entered may begin a new count, so a property marketed for many months can report a short time to contract.

Some data sources address this with a cumulative measure that follows the property rather than the individual listing, and the two figures can differ substantially.

Anyone comparing markets or periods should establish which convention is being used before drawing conclusions from a difference between two numbers.

Composition affects the figure

The measure blends every price range and property type in the reporting area, and those segments do not necessarily move together.

A shift in which segments are transacting can move the overall figure even when no individual segment has changed, which is a composition effect rather than a market change.

Narrowing to a specific segment and submarket produces a more meaningful figure, at the cost of a smaller sample that is noisier month to month.

Reading it alongside other measures

Days on market is most informative next to inventory levels, the share of listings with price reductions, and the relationship between list and sale prices.

A licensed local agent with access to the underlying listing data can produce these figures for a specific segment, which is more useful than any headline number for a metropolitan area.