Mortgage rates hit a 22-year high last month, surging to 7.5% on a 30-year loan before falling back to around 7% on news of slower-than-expected job gains this month.
And while those higher mortgage rates weighed heavily on metro Denver’s housing market in August, they didn’t break it, according to a monthly update from the Denver Metro Association of Realtors.
“The majority of sellers found themselves negotiating to get their homes under contract,” Nicole Rueth, a DMAR Market Trends Committee member and local mortgage professional, said in a video post accompanying the report.
The number of home and condo sales fell 2% last month to 3,792 and for the year the sales count is down 16.1%. Sellers obtained 99.46% of the list price last month versus 99.89% in July. The median number of days listings took to find a buyer rose significantly, from 9 to 11, a 22% jump.
Concerns over a tougher market ahead may have motivated some sellers to speed things up. New listings, which had been trending lower, rebounded 1.7% last month to 4,863 and are down 6.2% on the year. In July, the annual decline in new listings was running at a sharp 24.8%.
The available inventory of homes and condos listed on the market rose 8.9% from July to 6,858, which is just below the level of 6,939 seen a year ago.
Despite more expensive financing costs, home prices didn’t decrease. The median closing price of a single-family home held steady at $650,000 in August, matching July’s level, and remained ahead of the median price of $645,000 seen in August 2022.
For townhomes and condos, the median closing price last month was $419,950, nearly matching July’s median price of $420,000. Over the year, prices are up 5%.
Libby Levinson-Katz, chairwoman of the DMAR Market Trends Committee, in her comments, recounted a listing agent on a townhome who was frustrated to hear from several buyer agents that an offer was coming, only to be told later the buyer was holding off because of higher rates. That didn’t happen once or twice, but five separate times.
“The important message is that sellers are eager for qualified buyers to make an offer,” she said. “It’s critical to make sure buyers understand their buying power before they start looking at properties.”
Mortgage rates have backed off their recent highs and could drop more if labor markets and the larger economy continue to soften. That would improve affordability but also present its own set of challenges for the housing market in the months ahead, Rueth said.
Interest payments on student loans, suspended back in 2020, are set to resume this month. The excess savings built up during the pandemic are almost depleted, and credit card borrowing has topped $1 trillion.
Unemployment rates are rising, job openings are coming down and the trend of quiet quitting is now being replaced by “quiet cutting,” where workers are demoted and put into lower-paying positions.
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