As the Summer weather heats up, so does Denver's residential market! The 10-year average for new listings in May is 7,039, but May 2024 saw an impressive 7,169 new listings. The inventory is increasing, we are at 2 months of inventory. The average mortgage rates for the end of May were at 7.03% 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 May 2024.
Supply
In May, we had 7,169 new listings hit the market! This is up 29.9% in comparison to May 2023, and 14.8% up from April 2024.
The total amount of active listings for the end of the month was 10,300. This is a 51.4% jump from May 2023, and a 21.7% increase from April. The 10-year average from 2014 to 2023 is 7,418, this means we are well beyond our long-term average!
Demand
Showings are a great leading indicator of demand in the residential real estate market. There were 54,487 showings booked through the largest showing service, ShowingTime, in the Denver metro area during May. This is up 1.7% when compared to May 2023 and down (9.9%) compared to Apr 2024. The average amount of showings for May, over the last four years, is 85,965.
Denver had 4,027 properties go under contract in May 2024. This is up 1.9% compared to May 2023 and down (0.7%) from Apr 2024.
There were 4,260 closings in May 2024 compared to 3,840 in Apr 2024. This is a 10.9% increase from last month. A year ago, we had 4,283 closings in May so the volume of closings is down (0.5%) YOY.
The median days on the market for May increased from 6 days to 9 days, in comparison 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 than during the pandemic due to the higher interest rates. Let’s look at the median sales price.
Sales Prices
The median sales price has slowly risen during but is just below May 2022. The median price in May was $590,375, which is down from $600,000 in April. This metric includes detached and attached properties. The median price has increased $5,375 from May 2023.
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, prices were up 0.9% from last year! Compared to last month, May was (1.6%) lower than April.
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 10,300 listings on the market and 4,260 closings in May, the months of inventory is at 2 months or 10.36 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 higher than the record lows of 2022 and 2023 but is still lower than the long-term average. 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, 2 months of inventory is still quite low.
Link to the full presentation: Denver Metro Residential Market Update May 2024.pdf