How to Determine the Months of Inventory on the Market:
Find out how many active listings were on the market in the previous month.
Find out the total amount of transactions that were closed or sold in the previous month.
You can then divide the amount of total listings by the amount of sales, and this will give you the total amount of months of inventory which remain.
For example, if there were 8,634 listings in the past 30 days, and 987 of these were sold or closed, this leaves you with about 8.7 months of inventory left on the market. This would be an example of a Buyer's Market.
It's important to learn how to recognize these signs to figure out what type of market you are working with. You can also ask your real estate agent for guidance. A professional in your area will be following sales closely and will know whether it is a Seller's, Buyer's, or Neutral Market.