After a chilly January, February in Denver saw both the weather and the market heat up. While mortgage rates remain a significant factor, homes are still selling as rates change. Higher rates have trained buyers to be incredibly discerning, but have not tempered demand, particularly for homes in excellent condition in hot neighborhoods. Close to list price bounced slightly from January to February, up 0.74% to 98.88%. This is a strong sign that sellers are pricing their homes appropriately and are adapting quickly to market changes.
We saw significant activity on both new and older listings when rates dipped under 6% in mid-February. This activity can be seen in the higher average days on market contrasted with the uptick in average home prices. Buyers have increased flexibility on price when rates dip, and sellers are anxious to get homes that have spent a few weeks or months on the market under contract. A rate dip could bring out even more buyers. Especially with recent news in banking, many expect to see lower rates, but it is unknown how long it will last.
Denver still needs more inventory for potential buyers. Pending sales were up 19% from January, so despite having 20.58% more listings on the market in February, active inventory was down 8.30% to 3,778. To put this into perspective, that is up 208.16% from one year ago when active inventory sat at 1,226. Inventory is up, but from a record low. Since 1985, the average number of listings for February in Denver is 12,905. We did see February bring out many sellers who entered the market after they decided to not list last Summer. While interest rates are high, buyer interest is also up.
Buyers are making moves, with closings up 22.5% from January and average home prices up 5.23%. Signs point to a buyer pool that is getting comfortable with interest rates above 6% or at least is confident that they will be able to refinance in the near future. Year-to-date listings are down 27% from last year, so competition remains tight.
In any market, but especially in the dynamic Denver market with limited inventory and changing rates, the best time to buy a house is when the home you want is available. If you are a buyer waiting for interest rates to come down, consider speaking to a lender now. Knowing what you can afford now can help you make informed decisions in the future. Lastly, don’t be afraid to use your broker. Your Generator advisor is meant to be a resource throughout your homeownership journey, and we are ready to help when you need it.