Colorado homebuyers have struggled for years with slim pickings and unfavorable conditions. But a monsoon of listings in recent weeks may finally end the supply drought.
Statewide, the inventory of homes and condos available for sale at the end of June shot up from 19,790 a year ago to 24,365 last month, a 23% increase, according to counts from the Colorado Association of Realtors.
That aligns with the 23.6% annual inventory jump that the National Association of Realtors measured for June nationally.
Those averages mask wide variations within the country and the state. Seven Colorado counties saw their inventory of single-family homes available for sale in June surge 50% or more, led by Hinsdale County, which had a 257% gain. The inventory doubled in Sedgwick County and was up 94% in Gilpin County.
Those are smaller counties with 65 or fewer single-family properties listed for sale at the end of June. Wild swings are par for the course. Teller and Park counties — with more than 300 active listings each — saw increases of 68% and 41% respectively.
Denver, the state’s second most populated county, led the Front Range with a 41% annual gain in both single-family and condo inventory. Jefferson, Boulder and Arapahoe are other Front Range counties that saw active listings for single-family homes shoot up by a third or more.
“The townhouse/condo market has struggled to gain traction this year, as buyers face affordability challenges with elevated mortgage rates, spiking insurance costs, and overall inflation pressuring monthly budgets,” said Denver County Realtor Cooper Thayer in the CAR report.
Thayer added the pace of attached home sales in June was more typical of a winter month. With new listings fairly flat in June, the higher inventory is being driven by a slowdown in sales, which fell 11.6% for single-family and 22.8% for condos and townhomes year-over-year.
El Paso County, the state’s most populated, exemplified a condo market not gaining traction. The single-family inventory was up 16.1% — middle of the pack among Colorado counties. The condo and townhome inventory rose 82.6%, the worst showing of any large county in the state.
Single-family inventory gains in metro Denver were the smallest in Adams County at 15.8%, which could reflect a push by buyers searching for affordability. Weld, Larimer, and Pueblo counties all came in below that.
The western Interstate 70 corridor also appears to be sidestepping the inventory surge. For single-family homes, Mesa County’s inventory was up 3.3%, Eagle County was up 0.4% and Garfield County saw its active inventory fall 6.6%.
“Mesa County is seeing some positive signs in inventory, but there is a long way to go in closed transactions. Solds were down 26.6% from this time last year, standing at 254 units. Between the rising prices and the current interest rates, a big concern is affordability,” said Ann Hayes, a Grand Junction Realtor, in comments included with the CAR report.
Higher mortgage rates have pushed more buyers out of the running. Even with more homes to choose from, those buyers may not be enticed to step back into the race unless either rates or prices fall, or both.
“Despite rising inventories of homes for sale, home sales remain muted for both existing and newly built homes as buyers remain wary of the direction of mortgage rates and housing market trends, especially in markets impacted by the surging cost of home insurance and taxes,” said Selma Hepp, chief economist at CoreLogic in an email.
What might motivate buyers if more supply doesn’t? Hepp argues a Federal Reserve interest rate cut in September could give the market a “much-needed boost.”
Another way to measure the tightness in a housing market is by looking at how long the current supply of listings would last at the current sales pace.
Nationally, the country had 4.1 months of supply in June, up from 3.7 months in May and 3.1 months a year ago, according to the National Association of Realtors.
The last time buyers had more than four months of inventory at their disposal was in May 2020, during the depths of the pandemic lockdowns, said Lawrence Yun, chief economist with the National Association of Realtors, in a release.
Four months of supply still skews in favor of sellers but is closer to a balanced market than three months.Colorado’s single-family home market remains tight at a supply of three months, even with the recent inventory surge. For condos and townhomes, the supply is at 3.9 months.
Hinsdale, San Miguel and Huerfano counties were all at 20 months or more of supply for single-family, but they are comparatively small markets. Mountain resort counties like San Miguel also have more expensive properties that take longer to sell. That contributes to a backlog in inventory.
Despite a 41% annual inventory gain last month, Denver was at 2.7 months of supply in June, among the tighter counties in the state. Jefferson and Adam counties were down at two months of supply. The housing market was also still tight in Arapahoe, Douglas, Broomfield and Weld counties.
Even if the market hasn’t tipped in favor of buyers, the inventory surge could make it more difficult for sellers in the months ahead, especially if lower interest rates don’t trigger a surge in demand later on this year.
A record one in five sellers nationally cut their list price in June, according to Redfin, the Seattle-based brokerage. After Indianapolis, Denver had the second-highest share of sellers making a cut at 46.6%.
More buyers, perhaps not fearing a lack of options, are canceling their contracts, which can represent a significant setback for a seller. Cancellations represented about 15% of the total purchases made nationwide in June, according to Redfin.
More inventory also means more time on the market in a region that had grown accustomed to properties selling quickly. About 57.6% of June listings in metro Denver were unsold after 30 days, compared to only half a year earlier, Redfin reported.
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Originally Published: July 26, 2024 at 6:00 a.m.
