Metro Denver single-family home prices, after dancing between an annual loss and gain in January, crossed over to the dark side with both feet in February.
The median price of a single-family home sold in metro Denver last month was $600,000, down 5.7% from the same month a year earlier, according to a monthly update from the Denver Metro Association of Realtors. That decline happened despite more robust activity in February, including a 0.8% jump in median prices from January.
The annual drop in median sales prices for condos and townhomes wasn’t as large at 1.2%, and the monthly gain was more robust at 1.14%. Average condo prices were still in positive territory at 3.1% on the year. The median price of a condo sold was $400,000.
In January, the median sales price of a single-family home was down 0.68% but the average sales price was up 1.94%, making it too close to call a falling market. But in February, the average price was down 1.4%. Metro Denver is back in the depreciation zone, and it isn’t alone.
Earlier on Thursday, the real estate brokerage Redfin announced that U.S. home prices fell on an annual basis for the first time since February 2012, a reversal it attributed to 30-year mortgage rates rising back above 7% after rates closer to 6% breathed some life back into the market at the start of the year.
“Prices falling from a year ago is a milestone because it hasn’t happened since the housing market was recovering from the 2008 subprime mortgage crisis. But it’s not surprising and in many ways, it’s welcome,” said Redfin Deputy Chief Economist Taylor Marr in a release. “Home prices skyrocketed so much over the last few years that they were likely to come down once rates rose from historic lows.”
Prices peaked late last spring in metro Denver and the robust gains captured early in 2022 are making for some tough comparisons. Metro Denver saw a drop in home prices in May 2020 during the pandemic, but that quickly reversed after the economy reopened. The last time home sales prices were negative was in 2011, when the market was still recovering from the housing bust and Great Recession.
Although price declines create more favorable conditions for buyers by improving affordability, they aren’t good news for anyone who stretched to buy something in the first half of last year with a small down payment.
The number of closings for both homes and condos rose by 22.5% from January to 2,661 in February, but activity remains down by nearly a quarter from the activity seen in February 2022. The number of active listings fell 8.3% over the month to 3,778, the second-largest drop on record. But it is up 208.1% from a year earlier when the inventory of homes for sale was at record lows.
In other signs of a strengthening market in terms of activity, new listings were up 20.6% from January and pending sales, a measure of future activity, rose 19%, indicating momentum heading into March. And listings were turning over faster, spending a median of 25 days before finding a buyer compared to 34 days in January.
“Buyers are watching rates closely and patiently waiting for new inventory to hit the market,” said Libby Levinson-Kataz, head of the DMAR Market Trends Committee, in comments accompanying the group’s report. “They are more discerning about home prices, less willing to compete and will only jump into a bidding war if the house is move-in ready and suits their needs.”
