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Record October for home sales

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Highlights:

  • Gary Bauer and Metrolist release October report.
  • Best October on record by a number of metrics.
  • Lower mortgage rates boosted market.
It was a record October of under contracts. Source: Gary Bauer

It was a record October of under contracts.
Source: Gary Bauer

Last month was the best October on record for Denver-area home sales and housing prices, according to reports released today.

“October was a really good, strong month,” said independent broker Gary Bauer, who released a report based on Metrolist data. Metrolist also released its own report.

“Buyer demand remains strong,” said Littleton-based Bauer. “I think we are going to continue to have a stronger than normal fall season.”

By the numbers, records set in October include:

  • 5,452 homes placed under, a 17.9 percent jump from the 4,624 in October 2012 and a 2.2 percent gain from the 5,337 in September.
  • 4,628 home closings, a 13 percent gain from the 4,095 in October 2012 and a 2.2 percent decline from the 4,730 in September.
  • The average price of a single-family home closed was $332,184, up slightly from the $331,382 in September and about 9 percent higher than the $304,237 in October 2012.
  • The median, or middle, price of a single-family home closed rose to $275,000, up 7.8 percent from the $255,00 in October 2012, and down slightly from $277,000 in September.

It was also a record 10-month period.

Year-to-date, 61,515 homes were placed under contract, a 24.5 percent increase from the 49,429 in the first 10 months of 2010.

Closing through October rose by 20.6 percent to 47,295 from 39,207.

$3.5 billion increase

The total dollar volume on a year-to-date basis rose to a record $14.4 billion, 32 percent more than the $10.9 billion in the first 10 months of last year.

The inventory of unsold homes at the end of October was 9,734, a mere 0.2 percent increase from the 9,719 in October 2012 and a 5.9 percent drop from the 10,348 in September.

Year-to-date sold prices. Source: Gary Bauer.

Year-to-date sold prices. Source: Gary Bauer.

Some 5,152 homes came on to the market at the end of October, almost matching 1 to 1 the number of closings and contracts, Bauer noted.

Earlier, Lane Hornung, CEO of 8z Real Estate,  predicted the fall housing market would not see as big of a seasonal drop-off as normal, even as some pundits predicted a downturn.

“It’s not a huge surprise to see these strong numbers for October,” Hornung said.

“Local experts on InsideRealEstateNews.com have been predicting a stronger than usual fall market since back in the summer,” he said.

“The same can’t be said for the so-called experts at the national real estate websites who were predicting a market slow down.”

Typically, for seasonal reasons, contracts drop in October from September, but October bucked that seasonal trend.

“The number in the October data that really jumped out at me was the uptick in the number of under contracts from September to October,” Hornung said.

“Since under contracts are a leading indicator, this bodes well for our market through the end of the year,” he said.

Mortgage interest rates fluctuated both downwards and upwards during the month.

Bauer, and other Realtors, said consumer are taking advantage of lower mortgage rates, hovering around 4.125 percent to 4.25 percent for a 30-year-fixed rate loan, after spiking close to 5 percent, after rising from all time lows around 3.3 percent.

Peter Niederman, CEO of Kentwood Real Estate couldn’t agree more.’

“Consumers got another bit of the interest-rate apple,” Niederman said. “That is why under contracts are doing better than closings. People who felt like they missed an incredible opportunity, got another chance, even though even after interest rates rose they were phenomenally low by historic standards.”

However, the market does face headwinds, Niederman said.

Year-to-date closings. Source: Gary Bauer.

Year-to-date closings.
Source: Gary Bauer.

“I think the rhetoric on the Fed easing its $85 billion a month in bond buying will start soon after Jan. 1,” Niederman said.

“If the Fed does start to ease on its buying, whether it is in the first quarter or the second quarter of 2014, interest rates will likely rise,” he said.

Still, October was a month for the record books.

“It was a spectacular month,” Niederman said.

Kirby Slunaker, CEO and president of Metrolist, agrees.

“Our brokers and agents have seen a very busy year with a record-setting selling season,” Slunaker said.

“Sales, inventory levels and average home prices have changed very little from prior months, keeping the market nearly as competitive as the hot summer months.” he said.

He noted that the drop in inventory has helped average prices stabilized instead of dropping with the temperature.

The average days on the market increased slightly, although there is less than a seven-weeks of supply on the markt.

“While the market has slowed down slightly as one would expect, the numbers are incredible,” Slunaker said. “Increasing inventory spurred on by hot early season buying will continue to provide buyers with more and varied opportunities.”

Anthony Rael, a broker with RE/MAX Alliance, said the market remains red hot for homes priced below $200,000.

“We are still seeing multiple offers in that price range,” Rael said. “Pent-up demand still seems to be strong. We just can’t always find the right properties for the right buyers.”
 He said some consumers are now kicking themselves for not buying when home prices were low, as they expect that prices on a long-term basis will continue to rise.

“People who were sitting on the fence too long are now chasing the market,” Rael said. “The market bottomed out a long time ago. Now, there seems to be renewed interest as interest rates are around 4.25 percent for a 30-year mortgage. I do not see any slowdown during the cold months.”

Bauer said Denver-area consumers may be more bullish than they are nationally.

Across the country, consumer confidence in October fell to 71.2 percent from 80.2 percent in September.

“That’s almost a 10-point drop in a month,” Bauer said. “When consumer confidence drops, you expect that people would put off big purchases like buying a home. But that wasn’t the case in Denver in October.”

Have a story idea or real estate tip? Contact John Rebchook at  JRCHOOK@gmail.com. InsideRealEstateNews.com is sponsored by Universal Lending, Land Title Guarantee and 8z Real Estate. To read more articles by John Rebchook, subscribe to the Colorado Real Estate Journal.