- Home sales sizzled in June.
- A number of records were set.
- Almost 1K homes added to the market since May
Home sales soared in the Denver in June, while close to 1,000 homes were added to the inventory, according to reports released today.
Last month, there were 7,420 homes placed under contract, a record for any June, while 973 homes were added to the inventory from May, according to a report released by independent broker Gary Bauer. Metrolist also released its own report.
The inventory of homes listed by Realtors in the metro area rose 11.8 percent to 9,187, compared with 8,214 in May.
The number of unsold homes on the market was still down 15.9 percent from June 2012, when buyers could choose from 10,925 homes.
“The big things is that we have almost another 1,000 homes on the market,” Bauer said.
“That is really good news,” said Bauer, who bases his report on Metrolist data.
“The Denver housing market is finally seeing some relief from our long-term undersupplied conditions,” said Kirby Slunaker, the CEO and president of Metrolist.
The average price of a single-family home sold in June was $349,339, compared with $335,776 and $324,497 in May and June 2012, respectively.
“Buyer demand continues to be strong and pricing is up a little bit,” Bauer said.
“We’re still seeing strong sales figures, which were coupled with another jump in sales prices—it’s clear buyer and seller confidence remains high,” Slunaker said.
Niederman said the 38.5 percent increase in under contracts from June 2012, “is pretty staggering.” Most of those homes will close in the next 30 to 60 days, he said.
Homes also are selling at a faster clip.
“The speed of the market also continues to pick up, with average days on market at 43,” Bauer said a 40 percent drop from the 72 average days on market in June 2012.
The monthly supply of inventory is at 2.18 months.
“Despite only a 2-month supply, our inventory level is much closer to where it was a year ago, compared to where we were earlier this year,” when the supply on unsold homes hit an all-time low.
“We are much closer to being a balanced market,” Bauer said.
“A balanced market is a typically thought of with one with a four-to-six month supply,” Niederman said. “With only two months of a supply, it is still a pretty brisk market. We can use more homes, but is moving in the right direction.”
In the first half of the year, buyers paid $6.8 billion for single-family detached homes and $7.8 billion for all homes, both records for the first six months of a year.
The 20,970 single-family homes sold and 26,198 closed in the first half of the year, also were records.
The year-to-date average and median prices for the first half of the year also were records.
There were 5,566 home closings in June, 13.5 percent higher than the 4,904 in June 2012, but down 1.7 percent from the 5,665 in May. Closings reflect homes that many homes that were placed under contract in prior months.
“I think it is the best June ever,” Bauer said.
Still, rising interest rates pose a threat to the improving market, Bauer said.
“So far, rising rates have not have had a dramatic impact on the market,” Bauer said.
“Buyers are working closely with their lenders trying to lock in the best rates possible,” Bauer said, noting they are still low by historical levels.
However, if rates continue to rise, it will have a much bigger effect on housing affordability, he said.
“If rates continue to go up, they will eventually dampen the market,” Bauer said.
Niederman said interest rates for a 30-year, fixed-rate loan have risen 100 basis points to 4.5 percent from 3.5 percent in a month or less.
“That is pretty unprecedented to have a 100-basis point increase in such a short period of time,” Niederman said.
Even though rates are still low by historical standards, Niederman said he has heard that nationally, a third of all home purchases have been for cash. “If that is true, it is interesting that people are willing to pay cash,” Niederman said. He said many of the cash buyers may be investors.
There also could be other issues on the horizon that could negatively impact the housing market, in Denver and across the country, he said.
He noted that last week Senate Finance Committee Chair Max Baucus (D-Mt) and Orrin Hatch, (R-Utah), announced they would take a “blank-slate” approach for looking at tax reform.
“That could mean eliminating the mortgage tax deduction and changing the capital gains rules,” in which most consumers don’t pay taxes on profits when selling their homes.
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