The Denver residential market is still looking good! The interest rates are slowly fluctuating around 6.7-6.8 for the month of July. The 10-year average for new listings is 9,316 for the month of July, but we only saw 7,571 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 July at 6.81%. 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 July 2023.
Supply
In July we had 5,083 new listings hit the market. Unfortunately, this was down (13.6%) from June and it was down (21.1%) from 2022. This would limit the options for potential buyers.
The total amount of active listings at the end of the month was 7,571. Fortunately, This is up 3.3% from June 2023. The 10-year July average from 2013 to 2022 is 9,316 listings, so we are below our long-term average.
The most recent report for detached home construction starts is June 2023. The Denver Metropolitan Statistical Area (MSA) pulled permits on 718 homes. This is lower than the three year average of 1062 for June. 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 50,982 showings booked through the largest showing service in the Denver metro area during July.
This is down (4.8%) when compared to July 2022. The average amount of showings for July, over the last four years, is 87,163. Therefore, we have a lot few showing requests than previous years.
Denver had 3,844 properties go under contract in July 2023. This is down (13.2%) compared to June 2023 but is down (15.0%) compared to July 2022.
There were 3,694 closings in July 2023 compared to 4,256 in June 2023. This is a (13.2%) decrease from June 2023. A year ago, we had 4,344 closings in July 2022 so the volume of closings is down (15.0%) YOY.
The median days on market for July 2023 was 9 days. This means half of the properties listed are under contract in 9 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 in July. In July the median sales price decreased from $594,970 to $588,000. This metric includes detached and attached properties. The median price decreased (0.3%) over June and is now only down (1.2%) from July 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.
Although prices are down slightly 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 7,571 listings on the market and 3,694 closings in July, 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.
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