The Denver residential market is still looking good! The 10-year average for new listings is 6,355 for the month of August, but we only saw 5,195 new listings this month. With low inventory and properties going under contract quickly, the months of inventory remained at 2 months. Mortgage interest rates with a 30-year term ended August at 7.18%. Let’s dive into the key market data for Denver residential real estate market to see what is happening with supply, demand, sales prices, and months of inventory for August 2023.
Supply
In August, we had 5,195 new listings hit the market. Fortunately, this was up 2.2% from July and it was down (5.2%) from 2022. This is a good sign, compared to last month, buyers have more options!
The total amount of active listings at the end of the month was 7,905. Fortunately, This is up 3.3% from July 2023. The 10-year August average from 2013 to 2022 is 9,216 listings, so we are below our long-term average.
The most recent report for detached home construction starts is July 2023. The Denver Metropolitan Statistical Area (MSA) pulled permits on 698 homes. This is lower than the three year average of 978 for July. Year to date construction starts for 2023 compared to the same period in 2022 shows a (37.6%) decline.
All in all, the supply is in a better position compared to 2021 and 2022, but is still lower than 2019 and 2020.
Demand
Showings are a great leading indicator for demand in the residential real estate market. There were 48,904 showings booked through the largest showing service in the Denver metro area during August.
This is down (9.6%) when compared to August 2022. The average amount of showings for August, over the last four years, is 87,644. Therefore, we have a lot few showing requests than previous years.
Denver had 3,691 properties go under contract in Aug 2023. This is down (4.0%) compared to July 2023 but is down (13.2%) compared to Aug 2022.
There were 3,803 closings in Aug 2023 compared to 3,694 in July 2023. This is a 3.0% increase from July 2023. A year ago, we had 4,351 closings in Aug 2022 so the volume of closings is down (12.6%) YOY.
The median days on market for Aug 2023 was 12 days. This means half of the properties listed are under contract in 12 days or less.
The list price to close price ratio held steady at 100%, so sellers are generally getting what they are asking. With that said, I have seen homes that are overpriced sit on the market for a long time.
All in all, demand for housing is softer when we look at showings but decent when we look at closings. Let’s look at the median sales price.
Sales Prices
The median sales price has increased every month this year, besides this month and July. In August the median sales price decreased from $588,000 to $577,500. This metric includes detached and attached properties. The median price decreased (1.8%) over July and is up 0.5% from August 2022!
The long-term average appreciation for residential real estate is 6%. Higher prices and higher interest rates will continue to temper appreciation in the short run. Tight inventory is helping to prop up the market.
This month, prices were up 0.9% from last year! We are encouraged to see the median price increasing as we roll through the summer selling season.
Let’s look at months of inventory now.
Months of Inventory
The months of inventory is a great indicator to watch for market trends. Typically, a seller’s market has 0-3 months of inventory. A balanced market has 4-6 months of inventory, and 7+ months of inventory is a buyer’s market. In a seller’s market prices go up. In a buyer’s market prices go down.
With 7,905 listings on the market and 3,803 closings in August, the months of inventory is at 2 months or 8.6 weeks of inventory. Therefore, the inventory is still low when compared to the demand. We expect the months of inventory to continue to be low this year.
All in all, months of inventory is a great metric to watch.
Final Thoughts
In conclusion, supply, demand, median sales price, and months of inventory are ideal key performance indicators to watch for market trends. Supply is higher than the record lows of 2021 and 2022 but is still lower than the long-term average. Overall demand is there even with higher prices and higher interest rates. We believe there is a tremendous amount of pent up demand happening right now and as soon as rates come down, more buyers will enter the market. Lastly, 2 months of inventory still quite low.
Here is a link to the full presentation: Denver Metro Residential Market Update Aug 2023.pdf