The 3 Most Important Charts For the DC-Area Housing Market in the Coming Months

• January 20th

by UrbanTurf Staff

Today, UrbanTurf is taking a look at what we think will be the three metrics that will determine the direction of the DC-area market in the coming months.

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The main theme of the market in the coming year will be something that homebuyers are all too familiar with: a dearth of homes for sale. In late 2020, there was about a 1.5-month supply of homes for sale in the DC region, historically one of the lowest inventories on record. December 2021 looked at that number and said hold my beer, as data last week revealed that the housing supply fell to its lowest level in 20 years last month. More homes will hit the market as spring approaches, but the influx likely won't be enough to satisfy homebuyers on the hunt. 

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Contract ratio may be the most important metric to watch over the coming months, particularly if inventory remains low. This statistic compares the total number of homes under contract in a given period to the overall number of active listings, making it a good marker for the level of competition in the market. A higher ratio signifies an increase in contracts compared to supply. For example, a ratio of 1.2 means there are 1.2 listings under contract for every listing that is active. 

For the last three months of 2021, the contract ratio in the DC area was above 1.0. and rose each month. If it stays in this range or rises as spring approaches, it means competition in the market in increasing. And that competition is already intense: in the last week, UrbanTurf has heard of two listings getting upwards of 20 offers each. 

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The one thing that might give buyers hesitation this spring is laid out in the chart above. Today, long-term interest rates rose to 3.56 percent, a 51 basis point increase since the beginning of the year and the highest that rates have been since early 2020. While still quite low by historic standards, buyers in recent years have grown accustom to rates hovering around 3 percent or lower. It will be interesting to see how the buying public react to these rising rates in the coming months. 

Data provided by Bright MLS. Photo courtesy of HomeVisit.

This article originally published at https://dc.urbanturf.com/articles/blog/the-3-most-important-charts-for-the-dc-area-housing-market-in-the-coming-mo/19161.