The Blues captain has been very impressed with the Red Devils this season after their second half display against Newcastle at the weekend thinks that they are now favourites.
Chelsea maintained their quest for the top with a win against Tottenham Hotspur, while Arsenal were held at home by lowly Birmingham City.
"United are playing the best football and always score a lot. They are the big threat," Terry said.
"Arsenal are still up there but I can just see them slipping away a bit."
Liverpool also drew at the weekend and was slighlty more diplomatic than the majority of pundits who have ruled the Reds out completely from winning the the championships.
"It is going to be difficult for Liverpool to win it from the position they are in. If we can just keep winning and get our players back, we have a good chance," he added.
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