The Denver residential market is slowing down, but still looking good for November! The 10-year average for new listings is 3,292 for the month of November, but we only saw 2,504 new listings this month. The inventory is growing and currently we have 3 months of inventory. Mortgage interest rates with a 30-year term ended November at 7.22%. 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 November 2023.
Supply
In November we had 2,507 new listings hit the market! This is down (29.5%) from October. Unfortunately, this is down (1.9%) compared to November 2022.
The total amount of active listings at the end of the month was 6,186. This is down (4.2%) from Nov 2022. The 10-year November average from 2013 to 2022 is 5,875 listings, so we are below our long-term average.
The most recent report for detached home construction starts is Oct 2023. The Denver Metropolitan Statistical Area (MSA) pulled permits on 887 homes. This is lower than the three year average of 892 for October. Year to date construction starts for 2023 compared to the same period in 2022 shows a (20.7%) 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 36,257 showings booked through the largest showing service in the Denver metro area during November.
This is down (0.9%) when compared to Nov 2022 and down (12.4%) compared to Oct 2023. The average amount of showings for November, over the last four years, is 63,161.
Denver had 2,513 properties go under contract in November 2023. This is up 2.9% compared to November 2022, but is down (8.9%) compared to October.
There were 2,585 closings in Nov 2023 compared to 2,913 in Oct 2023. This is a (11.3%) decrease from last month. A year ago, we had 2,884 closings in Nov so the volume of closings is down (10.4%) YOY.
The median days on market for Nov 2023 increased to 21 days from 17 days in Oct. This means that the market is slowing down, houses are sitting on the market for about a month before they are sold.
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 over priced sit on the market for a long time.
All in all, demand for housing is soft 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 slowly increased this year, but in the last month it has gone down. The median price in October was at $565,000, but compared to in October it was $575,000. This metric includes detached and attached properties. The median price has increased 0.9% over the last year.
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 0.7% from last year! Even though Nov 2023 is lower than Oct 2023, median sales prices are still rising above Nov 2022.
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 6,186 listings on the market and 2,585 closings in October, the months of inventory is at 3 months or 10.26 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, 3 months of inventory still quite low.
Here is the link to the full presentation: Denver Residential Market Update - Nov 2023.pdf