Home prices in metro Denver, a bellwether for the housing market across much of the state, declined for the second consecutive month in August as rising interest rates cooled demand.
The median price for a home in the area – which includes Boulder and Broomfield – was $579,000, down 2.54 percent compared to July, according to the latest report from the Denver Metro Association of Realtors. That’s still up 8.49 percent from a year ago.
The pandemic housing boom that pushed prices to records across the U.S. may be drawing to a close as the Federal Reserve hikes interest rates in its fight against inflation. Higher borrowing costs make it more expensive to make large purchases, including homes. That slows demand and, eventually, brings down prices.
The housing market traditionally slows at the end of summer as families turn their attention toward getting their kids back to school, but officials say this year’s slowdown feels more pronounced.
“Interest rates are still the biggest factor in their impact on buyer demand as it is a direct correlation to monthly payments,” said Andrew Abrams, a Denver realtor and chair of the association’s market trends committee, in the report. “With so much instability in the economy and the world as a whole, it is difficult to forecast how the housing economy will be impacted.
Price cuts are on the rise, and houses are taking longer to sell, according to the report. A single-family home sat on the market for about 12 days in August, more than double the time it took to sell a similar house a year ago. And fewer deals are getting done, with the number of closed sales down 30 percent from last year.
The sluggish sales mean the number of active listings are up from last year, giving supply-starved buyers more to choose from. But that might not last long as people that locked in low mortgage rates during the past two years will be less interested in moving as long as interest rates are rising.