Homesnap's unique "Market Health Score" is a statistical measure that weights, normalizes, and combines several complex real estate metrics into a single number. The Market Health Score is produced quantitatively from MLS data, there are no subjective components. Here is a general overview of how the score is computed:
The median sales price trend component of the Market Health Score carries a 10% weight. A downward trend (median sale prices down -5% to -10%) has a negative impact. A flat to slightly upward trend has a positive impact.
The inventory component of the Market Health Score carries a 25% weight. A healthy amount of inventory is between 2 to 6 months. An excessive amount of inventory (>12 months) has a negative impact.
The "contract pull-through" component of the Market Health Score carries a 25% weight. In a healthy market, a high percentage of contracts eventually close. In an unhealthy market, many/most contracts fall through.
The "equilibrium" component of the Market Health Score carries a 40% weight. In a healthy market, there is a relative balance between the number of new listings, price changes, contracts and sales. In an unhealthy market, the number of new listings and price changes far outweighs the number of contracts and sales.