Denver home prices drop for second straight month as mortgage interest rates rise

Home prices in the Denver metro area, a housing market indicator for much of the state, fell for the second straight month in August as higher interest rates cooled demand.

The median price of a home in the area – which includes Boulder and Broomfield – was $579,000, down 2.54% from July, according to the latest Denver Metro Association of Realtors report. That’s still up 8.49% from a year ago.

The pandemic housing boom that has pushed prices to record highs across the United States may be coming to an end as the Federal Reserve raises interest rates in its fight against inflation. Higher borrowing costs make major purchases, including homes, more expensive. This slows down demand and eventually lowers prices.

The housing market traditionally slows in late summer as families look to get their children back to school, but officials say this year’s slowdown appears more pronounced.

“Interest rates are still the most important factor in their impact on buyer demand because they directly correlate to monthly payments,” said Andrew Abrams, a Denver realtor and chairman of the Market Trends Committee of the association, in the report. “With so much instability in the economy and in the world as a whole, it is difficult to predict how the housing economy will be affected.

Price drops are on the rise and homes are taking longer to sell, according to the report. A single-family home stayed on the market for about 12 days in August, more than double the time it took to sell a similar home a year ago. And fewer deals are closed, with the number of deals closed down 30% from last year.

The slow sales mean that the number of active listings is up from last year, giving more choice to buyers short on supply. But that might not last long, as people who have locked in low mortgage rates for the past two years will be less interested in moving as interest rates rise.

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