Home Sales Decline for Third Month in a Row, Reaching All-Time Highs – What’s Next?

Denver, Colorado – Sales of existing homes in Denver, Colorado declined for the third consecutive month in May, accompanied by an all-time high in prices. The National Association of Realtors reported that year-over-year sales were down by 2.8%, dropping 0.7% in May from April to 4.11 million units on a seasonally adjusted annual basis.

The real estate market is facing challenges with elevated interest rates hovering around 7%, making it difficult for homebuyers to afford properties. Lawrence Yun, the chief economist at the NAR, expressed surprise at the lack of recovery in the market this spring, attributing the situation to the ongoing affordability issues.

Despite the decline in sales in three out of four regions, the Midwest, rated as the most affordable region in the country, saw an increase in home sales. With home prices hitting record highs, inventory of homes for sale also saw an increase of almost 7% in May to 1.28 million units, the highest in over four years.

The median home price rose nearly 6% annually to $419,300 in May, marking 11 consecutive months of year-over-year price gains. Propelled by increased demand, properties are remaining on the market for an average of 24 days in May, with nearly one in three homes selling above the listing price.

First-time homebuyers contributed significantly to the market activity, with their share of purchases surpassing 30% for the second straight month. Yun mentioned a “strange phenomenon” where despite low home sales activity, prices continue to surge, and multiple offers remain prevalent.

Sales for homes priced over $1 million saw a substantial 23% increase, while lower-priced homes faced declines. The current monthly payment to buy a median-priced home has more than doubled since the pre-pandemic era, impacting the affordability of homes for the American public.

In conclusion, the real estate market in Denver, Colorado faces challenges with declining sales, rising prices, and limited inventory, impacting both buyers and sellers. The ongoing trends reflect the complexities and nuances of the current housing market dynamics, necessitating a careful balance of supply and demand to ensure a sustainable and stable real estate environment.