After breaking into the Villa first team, Davis has proven to be impressive and has so far managed to score two goals from 13 Championship appearances.
As a result of injuries to Gabby Agbonlahor and Jonathan Kojia, Davis has been provided with first team opportunities and he has so far seized the opportunities that he has been provided.
His performances have also led to him being called up to the England U-20 squad.
He said: "It's a great feeling to have signed a new contract.
"This is another milestone for me this season: I had my first start and my full league debut then an international call-up and this is another one.
"The hard work continues, now. I've got to keep working and reach that next milestone."