The Contract Ratio for all areas & types in the ARMLS database has now dropped below 60.

This is in the "Balanced Zone" between 30 and 60, confirming just how far and how fast the market has cooled in the last 3 months.

Four months ago we had the third highest reading (262.6) we had ever recorded. In April this had moved down to 230.1, still very hot.

The collapse between April and June is unprecedented - faster and more violent than we have ever witnessed. This is due to a very rapid decline in demand coupled with an explosive rise in supply.

At 59.8, the contract ratio is the lowest we have seen since March 2019. The trend indicates that it has further to fall.

The contract ratio is a simple and immediate measure, with no averaging or smoothing effect. It is therefore very responsive to violent changes in the market. In contrast the Cromford® Market Index is based on averages over the prior 30 days and is smoothed to avoid reacting to insignificant variations from day to day. It normally gives a more reliable picture of the market than the contract ratio. However in times of dramatic change, it can move a little slower because of the averaging and smoothing. I would take signals from the contract ratio to be more up-to-date by an average of 2 weeks compared to the CMI. At the moment the CMI is clearly telling us that the market is cooling rapidly, but it probably understates by a week or two just how far it has already cooled as of July 1.

The contract ratio is telling us that we are already in a balanced market. If it drops below 30 then it will indicate a cold market with a significant surplus of sellers over buyers. We have not experienced a market like that since April 2009.


Market incites provided by the Cromford report.