February's Market Insights

11-County Metro Denver Area

By the numbers, February showed signs of improvement. Home prices were mixed, with some segments showing gains. The number of closed transactions saw a nice bump compared to January. The time it takes to sell a home has steadily increased from the record low in April of last year, but that trend may be stabilizing. Fewer sellers are involved in this market, and that is helping stabilize home prices.

The average closed price rose in February to $657,921, 5.23 percent higher than in January. This signals positive news as February’s number is 1.29 percent above last February. The average closed price did increase from January, but how much of the increase can be attributed to normal seasonality? Since 2008, the average seasonal increase from January is 1.36 percent. So, a 5.23 percent increase demonstrates an early start to the spring selling season. The median closed price did drop in price by 2.17 percent year-over-year. Not all good news.

We closed 2,661 homes in February, up from 2,172 last month. That was a 22.51 percent increase. From 1987, the average percentage increase from January to February is only 1.93 percent. This year’s increase of 22.51 percent is significant as it represents the second highest on record. Overall, the number of closed transactions is below last year’s pace by 25 percent. I don’t see this situation improving anytime soon.

3,451 new listings came on the market in February, up from 2,862 in January. This represents a healthy increase of 20.58 percent, considering the seasonal average is 7.48 percent. Year-to-date, we’ve closed 17.8 percent fewer homes than last year. It would appear this is unwelcome news. So, can fewer transactions be positive? The answer is yes. Housing prices are linked to the basic economic principle of supply and demand. Last year, buyers quickly moved to the sidelines as mortgage rates rose rapidly. This caused price growth to slow, but over the last 19 weeks, inventory has been dropping. Fewer buyers plus fewer sellers equal price stabilization.

Currently, we are sitting on 48 days to sell a home. This compares to 46 days last month and 14 days last year. Things get a little more interesting when we look at days on the market of those homes that have yet to receive an offer. Those properties are currently sitting at 73 days on the market.

While some signs of improvement are visible, our local housing market is in a different place today. Buyers and sellers should adjust their expectations to a new normal. The likelihood of returning to a market like 2020 and 2021 is not probable. There continues to be cause for concern as mortgage rates have started creeping upward again. This could change the dynamics once again.