August Metro Denver Market Review
August in Denver’s real estate market showed clear signs of seasonal shifts and ongoing economic adjustments, with affordability remaining a significant challenge. With inventory up 1.32%, buyers have more choices, and with median days on the market up 31.25% to 21 days, they have more time to make those decisions. Buyers in August took advantage of these conditions with a slight dip in mortgage rates, pushing pending listings up 7.7% from last year. As we transition from summer to fall, those still looking to make a move can find opportunities, though changing mortgage rates and inventory continue to shape the landscape.
Inventory Challenges Persist
August saw a slight but notable increase in active listings from July, but a significant year-over-year jump of over 56%. New listings were down a modest 0.76% from last month, but buyers had more to choose from overall. We use months of inventory to measure if there is enough inventory to meet the market’s demand. Based on August data, we have 3.61 months of inventory for attached homes, but only 2.74 months for detached homes. A balanced market is believed to have 4-6 months of inventory, but these numbers are more than twice as high as in 2023. We may be technically in a seller’s market, but buyers have more power than they have had in years.
Buyers are flexing this power by waiting and being more selective, making even this increase in inventory feel like more is needed. With rising costs, many are rightfully holding out for homes that check every box. Buyers seek custom and high-end details, flexible layouts, and long-term value. Competition for the perfect home is high, while buyers looking for homes that need work or attached properties may feel like they are holding all the cards.
The Affordability Challenge: A Complex Picture
Affordability remains a key concern, with home prices nationwide up 49.1% over the past four years and mortgage rates pushing monthly payments even higher. Denver saw a slight decrease in home prices since hitting a record high for the local Home Price Index in Q2 2024, with a 2.6% drop since April. Mortgage rates dipped from 6.7% to 6.4% in August, providing some relief. But these aren’t the only expenses buyers are juggling; higher taxes and insurance premiums also remain a concern. Even still, the new normal eventually becomes routine, and as we near the two-year mark of elevated interest rates, the Denver market is still active, and median home prices remain consistent. This suggests an adapting buyer pool, even in a market where affordability remains a challenge.
Seasonal Trends and Future Expectations
As fall approaches, a seasonal dip in home prices is expected. Typically, prices decline during the colder months before leveling off in winter. However, potential Federal Reserve rate cuts add some unpredictability. Often, these cuts are baked into interest rates before they even happen. The slight drop in mortgage rates in August may have been due to potential cuts, or there could be another small drop in interest rates following the expected Fed rate cut. This month’s minor mortgage rate adjustment spurred a 3.7% rise in pending homes. Further mortgage rate decreases will significantly increase competition, which could, in turn, raise home prices. Perfectly timing the market is tough, but the current mix of slightly lower prices and falling rates could present a window for action.
Resilience and Adaptation Define Denver’s Market
This August, the Denver real estate market showed resilience as buyers navigated higher interest rates. The market remained active, with notable increases in pending sales and active listings. With mortgage rates showing signs of easing and potential rate cuts on the horizon, the coming months may present an opportunity for both buyers and sellers to capitalize on this changing market. The Denver market is evolving, but for those who adapt, it still offers room for growth and opportunity.