The Three Charts That Indicate The Spring Housing Market May Favor Buyers

• February 15th 2019

by UrbanTurf Staff

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The spring housing market is a couple weeks from getting into full swing, but UrbanTurf dug into a variety of current market metrics that give a sense of what buyers and sellers in DC might be dealing with when the market gets going. And for the first time in years, it looks pretty good for buyers. 

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The benchmark for a balanced supply of homes for sale is six months, a level that the DC-area has been well below for years. However, it appears that buyers will have a lot more to choose from this spring. The supply of active homes for sale in the city has been rising for the last six months, jumping notably year-over-year in December (+20%) and January (+28%). If that keeps up, buyers will likely not be competing on the level that they have in recent years. 

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One of the most important and least known metrics in housing is contract ratio, a critical indicator of housing demand. Contract ratio compares the total number of homes under contract in a given period to the overall number of active listings. For the last three years, this ratio in DC has regularly hovered above 1.0, meaning that active listings are receiving at least one contract. However for the last several months, the contract ratio has been dropping on an annual basis each month and hasn't been above 1.0 since May 2018. In short, this means that the market is getting less competitive. 

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Interest rates are not at all-time lows, but they are at their lowest level in a year and that is good news for homebuyers. Long-term rates reported by Freddie Mac came in at 4.37 percent this week, after approaching 5 percent a couple months ago. Even though today's homebuyer has gotten used to rates this low, it should get more people off the sidelines this spring. 

Thumbnail photo of home on Capitol Hill for sale. 

This article originally published at https://dc.urbanturf.com/articles/blog/the-three-charts-that-indicate-the-spring-housing-market-may-favor-buyers/15010.