The Denver residential market is showing signs of slowing down. The 10-year average for new listings in August is 6,237, but for August 2024, the number of new listings was below the 10-year average at 5,406. The inventory is continuing to increase, we are at 3 months of inventory. The average mortgage rates for the end of August dropped to at 6.35% for a 30-year term. Let’s dive into the key market data for the Denver residential real estate market to see what is happening with supply, demand, sales prices, and months of inventory for August 2024.
Supply
In August, we had 5,406 new listings hit the market! This is up 3.8% from last year (Aug 2023) and down (1.3%) from July 2024.
The total amount of active listings for the end of the month was 11,785 listings! This is a 37.9% jump from August 2023 and a (1.7%) decrease compared to July 2024. The 10-year average for August is 8,708 active listings, which means we are well above the long-term average.
The most recent report for detached home construction starts is July 2024. The Denver Metropolitan Statistical Area (MSA) pulled permits on 666 homes. This is lower than the four-year average of 908 for July.
Demand
Showings are a great leading indicator of demand in the residential real estate market. There were 53,338 showings booked through the largest showing service, ShowingTime, in the Denver metro area during Aug. This is up 9.1% when compared to Aug 2023 and up 3.5% compared to July 2024. The average amount of showings for Aug, over the last four years, is 77,124.
Denver had 3,723 properties go under contract in Aug 2024. This is up 10.2% compared to August 2023 and up 6.6% from July 2024.
There were 3,605 closings in Aug 2024 compared to 3,786 in June 2024. This is a (4.8%) decrease from last month. A year ago, we had 3,878 closings in Aug so the volume is down (7.0%) YOY.
The median days on the market for August increased from 16 to 21 days, compared to last month. 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 overpriced homes sit on the market for a long time.
All in all, demand for housing is softer right now due to the higher interest rates. Let’s look at the median sales price.
Sales
The median sales price has slowly decreased for the month of August. The median price in August was $585,000, which is down (0.8%) compared to last month. It's still higher by 1.7% than August 2023. This metric includes detached and attached properties.
The long-term average appreciation for residential real estate is 6%. Higher prices and higher interest rates will continue to limit appreciation in the short run. Low inventory is helping to prop up the market. If we wake up tomorrow to 35,000 listings on the market, this would be a buyer's market and prices would likely be going down.
This month, average sale prices are up 1.9% compared to last August!
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 11,785 listings on the market and 3,605 closings in August, the months of inventory is at 3 months or 14.01 weeks. Therefore, the inventory is still low but is continuing to pick up. We are expecting it to slowly increase.
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 starting to rise, while closings are staying lower. Overall demand is steady 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, 3 months of inventory is still quite low.
Link to full presentation: Denver Metro Residential Market Update August 2024.pdf