In May, there were 1,427 active listings on the market in DC. That number amounts to a mere 1.95 months of inventory, well below the six-month benchmark for a balanced housing market and an indication of the continued effect that the pandemic is having on the market.
While the number of new listings coming on the market each month directly affects the city’s inventory, a little known metric is an equally critical indicator of the supply of homes for sale and homebuyer demand.
Contract ratio compares the total number of homes under contract in a given period to the overall number of active listings. 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.
The imbalance between high homebuyer demand in DC and the short supply of homes for sale is best illustrated in contract ratio. Approximately 40 percent of DC neighborhoods had a contract ratio above 1.0 last month, one of the highest levels on record. In Riggs Park and Brentwood, the ratio came in at 3.0 while in Deanwood, North Cleveland Park, Michigan Park and Colonial Village, it was 2.0 or higher. There were another 25 neighborhoods in the city where the contract ratio exceeded 1.0.
UrbanTurf will continue to monitor contract ratio in the coming months to see if the city maintains the supply and demand imbalance.
The thumbnail image is of a home that sold in North Cleveland Park in May.
See other articles related to: contract ratio
This article originally published at https://dc.urbanturf.com/articles/blog/the-demand-metric-that-defines-dcs-housing-market/16980.
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