New listings took a big jump in March over February! In fact, new listings increased 47.6% month over month. This means the buyers in the market have more options which is good because we also saw an increase in buyer activity. Mortgage interest rates ended February at 6.55% and March ended at 6.32%. 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 March 2023.
Supply
In March we had 5,479 new listings hit the market! This is up 47.6% compared to February but is down (11.9%) compared to March 2022. It was good to see such a large increase.
The total amount of active listings at the end of the month came in at 5,596. This is up 62.3% from March 2022 and is 7.3% higher than February 2023. The 10-year March average from 2013 to 2022 is 6,688 listings, so we are below our long-term average.
The most recent report for detached home construction starts is February 2023. The Denver Metropolitan Statistical Area (MSA) pulled permits on 525 homes. This is down (54.5%) compared to 2022 and down (30.7%) compared to March 2020. The cost of interest rates, materials, labor, and land have slowed new construction development for homes.
All in all, the supply is in a better position compared to the first quarters of 2021 and 2022 but is still lower than 2019 and 2020.
Demand
Showings are a great leading indicator for the residential real estate market. There were 59,495 showings booked through the largest showing service in the Denver metro area. This is down (47.2%) compared to March 2022. The average amount of showings in March, for the prior four years, was 102,048.
Denver had 4,166 properties go under contract in March 2023. This is up 23.8% compared to February but is down (12.3%) compared to March 2022.
There were 3,842 closings in March 2023 compared to 2,785 in February 2023. This is a 38% increase month over month! A year ago, we had 4,716 closings in March so the volume of closings is down (18.5%) YOY.
The median days on market for March 2023 dropped to 10 days from 25 days in February. This is another encouraging sign for the market. This means half of the properties listed are sold in 10 days or less.
All in all, demand for housing is picking up but is still lower due to the higher interest rates. Let’s look at the median sales price.
Sales Prices
The median sales price for March was $562,500. This metric includes detached and attached properties. The median price increased 1.3% over February but is down (6.3%) from March 2022.
The long-term average appreciation for residential real estate is 6%. Higher prices, compared to a few years ago, and higher interest rates will subdue appreciation for a period of time.
Although prices are down from last year, we are encouraged to see the median price increasing. 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 5,596 listings on the market and 3,842 closings, the months of inventory compressed to 1.5 months or 6.24 weeks of inventory. Therefore, the inventory is still low when compared to the demand.
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 the beginning of 2022 but is still lower than the long-term average. Demand is higher in March compared to January and February but is still lower than the previous four years. With the 30-year mortgage interest rate ticking down slightly, that helped the market. Lastly, 1.5 months of inventory still puts sellers in the driver’s seat.
Author:
Justin Reyher
Managing Broker at Beacon
Here is a link to the full presentation: