Low inventory and higher mortgage rates stymied Colorado’s typically robust spring housing market, according to the June report from the Colorado Association of Realtors.
The number of new single-family homes listed statewide last month dropped 24% compared to June 2022. The number of sold listings dropped 21% year over year. But the median sold price dropped only 1.1% to $583,125 in June from $589,500 in June 2022. Sellers received roughly 100% of their list price last month compared to 102% in June 2022.
While the housing market may appear frustrating, it’s showing signs of normalizing as buyers adjust to the new normal of higher interest rates.
“While a slowing market may appear concerning on the surface, it’s crucial to remember that the fast-paced, expensive conditions we’ve experienced over the past few years have been abnormal, and these changes are best characterized as a normalization of the market. Douglas County is and will continue to be one of the most desirable real estate markets in the country, and my outlook on property values is far from worrisome,” Douglas County realtor Cooper Thayer said in the report.
Limited inventory
Homeowners locked into low mortgage rates have little incentive to sell.
“Buyers are still on the fence, and sellers are pausing to put their home on the market in fear of not being able to find a replacement home,” said Barb Ecker, a Jefferson County-area realtor, in the report. “With very few homes to choose from, a strong seller’s market may return.”
Fort Collins-area realtor Chris Hardy said the limited inventory will keep housing prices high.
“With overall sales numbers and new listings on the market down, the housing market remains competitive – but not nearly at the frenetic pace of a year ago since the homes available for sale are lingering on the market a bit longer.”
Looking ahead
New home construction may be the best solution to boost low inventory.
In May, housing starts rose by 21.7% from April levels, according to a report from the U.S. Census Bureau.
Housing starts in May represented their highest level since June 2018. Single-family housing starts increased 18.5% to a seasonally adjusted annualized rate of 997,000, and multi-family housing starts climbed 27.1% to an annualized 634,000 pace.
While increasing supply will help, it’s unlikely to drop prices, said Denver-area realtor Matt Leprino in an interview. “The cost of construction has skyrocketed, too.”
For the rest of 2023, Leprino predicts the market will continue to balance.
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“We’re seeing the market balancing and correcting,” he said. “It’s like we’re putting a giant eraser on 2021-2022 and bringing prices back in check.”
Buyers entering the housing market are more accepting of the higher interest rates, Leprino said.
“All in all, despite data showing that there are dips and descending figures across the board, things are beginning to go very well for the Denver market. We still have a ways to go to achieve any type of full balancing act — and statistically speaking, we may never actually achieve one — but for the buyer in today’s market, things are significantly better than in the last couple of years and the seller also now may have the opportunity to enjoy the process” Leprino said.
The news and editorial staffs of The Denver Post had no role in this post’s preparation.
