Metro Denver's Housing Update - September 2023
Residential Housing Market Trends for the 11-County Denver Metro Area.
By the Numbers, September's Housing Trends Show Few Signs of Improvement. Buyers, including first-time buyers, continue to face barriers to entry as they struggle to find affordable options. If I could describe our housing market in one word, it would be 'frustrating.'
Let's Examine Housing Inventory: At the end of September, the metro recorded 7,629 active listings. This represents an 11.24 percent increase from August and a decrease of 0.70 percent from September of last year. Adding some additional context, the detached single-family segment increased by 9.36 percent from last month, while the attached single-family segment saw a much larger increase of 16.21 percent. Currently, 51.6 percent of the active inventory has reduced prices by an average of $61,406. The last time we were above 50 percent was in the first week of January.
As we analyze the absorption rate, commonly known as months of inventory, we see the number reach 2.4 months. Simply put, assuming no new listings enter the market, it would take 2.4 months to sell off our current inventory. The last time we were at this level was in January of 2012, with 2.64 months. This has always been a good measure of supply and demand. Adding some historical context, we saw our record low of 0.33 months occur in December 2021 and the high of 17.69 months in February of 1988.
Mortgage rates have continued to rise, applying more pressure on both buyers and sellers. I follow the site mortgagenewsdaily.com for daily rate changes, and they show a 30-year fixed rate at 7.70 percent. This compares to 7.21 percent from the same time last month. This shows the influence of the Fed's "higher and longer" policy. In 2021, 67.54 percent of closed properties used a conventional loan, with 18.96 using cash, and 8.16 percent using FHA. Today, higher rates are shifting behavior, with only 60.39 percent utilizing a conventional loan, 21.08 percent cash, and 12.49 percent FHA.
A newer statistic that I'm tracking is the percentage of closings in which the seller accepted an offer above, at, or below their asking price. For September, 26.6 percent of sellers accepted offers above the asking price, with 27.3 percent at the asking price, and 46.1 percent below the asking price. For some added context, in May of 2021, 72.2 percent of sellers accepted an offer above the asking price, 14.7 percent at the asking price, and 13.1 percent below the asking price.
Lastly, Some Better News: The average price of closed transactions increased by 0.63 percent from August and 3.13 percent from September of last year. While the numbers are small, the important takeaway is that they show increases and not decreases.