DMAR’s September 2024 Denver Metro Real Estate Market Trends couldn’t have come at a better time. Every real estate agent, mortgage professional, house hunter, hopeful refinancer, and their mothers are looking to the Fed meeting planned for next week. Will they reduce the federal funds rate? If so, will the change affect home loan interest rates too? (That would require the 10-year treasury yield to follow suit first.)
September 2024 Denver Real Estate Trends
An Unseasonal Slowdown
The Denver real estate market is taking an unexpected breather. Typically, the summer months—June, July, and August—are when the housing market heats up the most. School’s out, families are eager to move, and the weather is prime for open houses and home tours. But this year’s August stats tell a different story.
Let’s break it down, according to The Denver Metro Association of Realtors:
Active listings saw a modest 1.32% increase month-over-month (MOM) but were up a whopping 56.37% year-over-year (YOY), meaning there's more inventory hanging around than usual.
New listings? They dipped slightly by 0.76% MOM but were up by 4.76% YOY. Sellers are still listing, but it’s not a flood.
Pending sales rose by 3.74% MOM and 7.7% YOY, which means some buyers are still out there, making offers. This might be a hint at more interest rate-driven activity to come!
Closed sales, though, saw a sharp drop of 7.55% MOM and 10.3% YOY. Fewer deals actually crossed the finish line.
Price-wise, we’re not seeing major fluctuations. The average closed price held steady at -0.06% MOM, and the median price slipped slightly by -1.67% MOM, with a small 1.44% YOY increase. It’s nothing near a price crash, but it’s not the typical summer growth either. Even sales volume was down by 7.61% MOM and 8.24% YOY.
And let’s talk about how long homes are sitting on the market. The average days in MLS jumped 23.33% MOM and a significant 42.31% YOY, while the median days skyrocketed by 31.25% MOM and a staggering 90.91% YOY. Homes are lingering longer, and buyers seem more hesitant to pull the trigger.
With families wanting to move before the new school year and the weather perfect for house hunting, June, July, and August are historically the hottest months for home sales. This year, however, rising interest rates, insurance premiums, and economic uncertainty have thrown some water on the usual summer sizzle. In fact, over half of all sales statewide have included seller concessions, a sign that sellers are sweetening the deal to lure buyers off the sidelines.
So what does this unseasonal slowdown mean? It’s a mixed bag. On one hand, buyers have more negotiating power and can score better deals. On the other, sellers may need to brace for longer days on the market and adjust their expectations.
A Waiting Game
If you’ve been following the Fed’s moves lately, you know we’re all waiting to see if that long-hoped-for rate cut will come to fruition. Fed Governor Christopher Waller recently hinted at the possibility of an interest rate cut at the September meeting, which has buyers, sellers, and just about everyone in real estate sitting on the edge of their seats. Lower rates could be the spark that reignites a market currently stuck in a bit of a standstill.
The truth is, mortgage rates are everything when it comes to buying a home. Even a small drop can make a big difference in monthly payments—and that’s why everyone’s paying such close attention. Case in point: At the end of August, the 30-year mortgage rate dipped from 6.62% to 6.43%, but oddly enough, mortgage purchase applications still fell by 1.5%. Why? It seems buyers are waiting to see if rates drop even further before diving back into the market.
Let’s put this into perspective. If you’re buying a $500,000 home with a 20% down payment and a 30-year fixed mortgage, at 6.62%, you’re looking at a monthly payment of around $2,564. With a drop to 6.43%, your payment would fall to about $2,527. That’s $37 less per month—and while that may not seem like much, over the life of the loan, it adds up to nearly $13,320 in savings. That’s some serious cash!
Now, here’s the kicker: even a small dip in rates also increases buying power. When rates drop, buyers can afford a more expensive home for the same monthly payment, which is why everyone’s so eager for rates to fall even further.
But for now, we’re in a waiting game. Buyers are holding out for better rates, and the Fed’s next move could tip the scales.
A New Projection
So, remember when everyone thought the market would start picking up this year? Well, it turns out we might have rolled out the welcome home mat before the keys were handed over. According to a new forecast from Fannie Mae’s Economic and Strategic Research Group, total home sales for the rest of 2024 are now projected to be lower than expected. The real kicker? We likely won’t see a meaningful recovery until further into 2025.
Why the delay? For starters, the interest rate decreases that were expected to stimulate the market didn’t come as soon as predicted. While the first drop in rates just happened recently, it wasn’t enough to push the housing market into full gear. And let’s not forget that affordability remains a huge hurdle. Even with slightly lower rates, home prices are still high, and many buyers are struggling to make the numbers work, especially with added pressures like rising insurance premiums and other costs of homeownership.
That said, it’s not all doom and gloom. One interesting trend is that pending sales of starter homes are up by more than 10% year over year, signaling that first-time homebuyers are seizing the opportunity in this slower market. While these buyers are still facing affordability challenges, they’re jumping in now, betting on a market correction in the future and taking advantage of fewer bidding wars.
So, while the recovery might not come as quickly as we hoped, the pieces are in place for a gradual turnaround. With rates slowly trending down and demand simmering below the surface, we could see things start to pick up in the next year—just not as fast as everyone predicted.
Conclusion
Between an unseasonal slowdown, hopes of continued rate drops, and new projections pushing recovery into 2025, the market feels like it’s taking a pause.
But here's the silver lining: buyers are getting some much-needed space to strategize, especially those first-time buyers looking for starter homes. Sellers may have to sweeten the deal, but the long game still points to a more balanced market ahead. So, hang tight, Denver—it’s a marathon, not a sprint, and the finish line just got pushed a little farther down the road.
Want to be ready if rates take another little dive? Our Denver real estate experts are ready to help.
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