August saw a steady momentum in the Denver real estate market, with 3,805 homes going under contract, a slight increase from 3,668 in July. One trend that continued through the summer was the rise in seller concessions. More than half of all statewide transactions included some form of incentive, a response to buyer concerns over higher interest rates and rising home insurance premiums.
Inventory levels remained stable month-over-month, but the year-over-year change is significant. We closed August with 10,724 homes for sale, representing a 56% increase from the 6,858 homes on the market at the same time last year. While home values remained steady with no significant fluctuations in closed prices, the average days on market continued to rise. In my view, this increase is more likely due to sellers overpricing their homes than an overall slowdown in the market.
On the interest rate front, August brought welcome news. Rates steadily decreased, spurred by a sharp drop at the beginning of the month. Although this sparked some activity, many buyers are holding out for further reductions. Currently, rates are in the low 6s, and all eyes are on the Fed's September 18th meeting, where further cuts could be discussed.
That said, we believe the market has already priced in these expected rate cuts, so sharp declines are unlikely until next year. For buyers, now is an excellent time to lock in these more favorable rates before we see increased competition in the spring.
As for sellers, this could be an optimal time to list your property. We're predicting a substantial increase in inventory by next spring as many homeowners who purchased during the post-COVID buying frenzy (April 2020 to April 2022) may look to sell. These sellers, despite their low mortgage rates, may be facing unfavorable terms and could flood the market. This anticipated inventory surge will likely put downward pressure on prices, leading to further rate cuts from the Fed to keep the housing market stable.
Ready to discuss your real estate goals? Whether buying, selling, or investing, feel free to text 720.364.8214.
