The number of homes for sale in the Denver metro area have reached highs not seen since 2013.

At the beginning of 2024, the region saw a surge of new listings flood the market. There were nearly 11,000 homes for sale at the end of August, up 56% from last year, according to the Denver Metro Association of Realtors Market Trends report released Thursday.

Despite the most available options Denver has had in a decade, buyers aren’t biting.

The number of closed sales last month fell 10% from last year. August 2023 saw more than 4,000 closings and this year saw 3,600.

Homes are also sitting on the market longer.

The number of days a home is listed on the market has nearly doubled from the same time last year, jumping from 11 days to 21 days.

Yet, most homes are still selling at a higher price. The median sales price in Denver was $590,000 in August, down nearly 1.7% from July as the summer selling season wrapped up, but up 1.4% from the previous year.

“Buyers continue to watch the homes that have come up in their searches and may even be tempted to take a look,” said Libby Levinson-Katz, Realtor and DMAR Market Trends Committee chair, in the report. “However, they aren’t placing offers on homes unless it perfectly aligns with their wish list.”

The Denver Metro Association of Realtors stated there are segments of the 11-county region in a buyer’s market due to the recent influx of inventory, but it’s dependent on the price point or ZIP code. A buyer’s market is when buyers have more favorable conditions due to low demand and high supply.

The luxury market is most clearly in a buyer’s market, according to the association. Houses priced over $2 million had the highest months worth of inventory than any other price range in the market.

Homes priced at over $ 1 million are expected to see a sluggish rest of the year during the typically-slower fall season, Amanda Snitker, market trends committee member, said in the report.

“Buyers feel no rush to make a move,” Snitker said. “Mortgage rates have less impact at this price point above $1 million than other sectors of the market, although the declining rates are still providing some relief.”

A shift in rates

But across the market, more buyers may start showing up as mortgage rates have dropped, according to the association.

Closed sales are a lagging indicator due to the typical 30-day contract period.

Pending sales, homes under negotiations with a buyer and seller, were up 3.7% in August from July and up 7.7% year-over-year. The association expects closed sales could rise again next month.

“These statistics indicate that a reduction in mortgage rates is moving buyers back into the market,” the report said.

Buying slowed down as the average 30-year mortgage rate reached a 20-year high in October 2023 at 7.75% after years of mortgage rates between 3% and 5%, according to Federal Reserve data.

But over the year, mortgage rates fell to 6.35% by the end of August.

The Federal Reserve is also widely expected to drop interest rates at their next policy meeting on Sept.17-18. The question now is by how much.

Prospective homebuyers may be holding out until the Fed makes cuts, said Nicole Reuth, mortgage expert and market trends committee member, in the report. But, she noted, mortgage rates have dropped in the last year despite no rate cuts.

“While waiting might be the right answer for some buyers, it shouldn’t be based on expectation of plummeting mortgage rates,” Reuth stated.

She explained that the market has already priced in the rate cuts the Fed has signaled into the mortgage rates. Those may further drop if the cuts end up being larger than expected.

“While lower rates are in our future, trying to time the market will only lead to further indecision,” Reuth said.

Despite expecting more buyers in the market soon, the association’s Market Trends Committee notes that Denver is seeing a rising number of contracts falling through, Levinson-Katz stated in the report.

“This may be due to buyers getting cold feet, the rise in contingent offers, lending issues or bullish sellers unwilling to negotiate inspection items,” she said.