Article Courtesy of Domus Analytics, provider of MIBOR Market Insights
Days on Market (DOM, for short) has a different definition depending on who you ask. At a high level, the MLS calculates the number of days on market, usually starting with the listing date, and ending on either the contract date or the close date. Using the contract date is more common, but we see some that use the close date. If you aren't sure which one your MLS uses, look at a couple of listings and count the number of days between the various dates, then compare that number to the DOM field. In most cases, any time off market, like a temporary withdraw or hold, is excluded from the count of days, so you may see a slight variance.
Now that you know how DOM is determined, let's talk about how it's used in stats. Domus reports on the Median DOM for listings. Most MLS stats show median and average, but we always recommend using median, which accounts for those listings that linger around for months or even years and blow out the entire DOM trend when they finally sell. (There was one in our city that was on market for over 3 years!) Now this is where we vary from the MLS. To date, every MLS we've seen reports the DOM on the Closing month of the listing. So if a property was listed in January, went under contract in February, and didn't close until March, you wouldn't see the the DOM until the March stats came out in April. Said another way, even though the DOM stopped accumulating in February, you had to wait around until April, through the escrow period, to learn about that metric!
Why wait to share that information? That makes no sense to us, so we do it a different way. Domus reports DOM in the contract month. This means that you have earlier insight into the movement of the market, because you don't have to wait through escrow to get the information. To be clear, we use the same DOM field with the same number of days for each listing as the MLS, since we take it directly from them; but we calculate and present it to you on a different time schedule.
That being said, DOM is the biggest source of confusion amongst our users, because our methodology doesn't match the MLS. So we recently made an adjustment to make the difference more clear. The Domus method is now named "Days on Market (Pending)," and is found under the group of Pending or Contract metrics. The traditional method used by the MLSs is now called "Days on Market (Closed)," and is found under the Sold metrics. So now you have the option of looking at both or picking the one you like best to communicate with your clients. I think you know which one we would recommend.