The Colorado Springs-area housing market continues to show signs of a slowdown, though it’s far from a meltdown.
A new Pikes Peak Association of Realtors market trends report for August shows:
• Home sales totaled 1,366 last month, a 27% decline from August 2021. Sales have declined for three straight months on a year-over-year basis, which likely signals that some buyers are on the sidelines as higher mortgage rates make it tougher for them to afford a home.
• Properties spent an average of 17 days on the market before selling, nearly double from the nine days during August 2021.
• The median price of homes that sold in August climbed to $480,592, up 6.8% compared with the same month last year. Despite that increase, it was the second consecutive month that prices rose by single digits on a percentage basis after 24 straight months of double-digit gains.
• The supply of homes for sale spiked to 2,639 in August, the most for any month since 2,660 in August 2016. Based on recent sale trends and the current inventory, the area had a 1.9-month supply of homes available for purchase in August, up from less than a half-month when the market was at its peak.
Combined, those indicators point to a cooling off from the buying-and-selling frenzy that dominated the housing market early in 2022 and for much of the past few years. That’s when the inventory of homes for sale plunged to historically low levels and sellers fielded multiple offers that often were several thousand dollars over their asking price.
Now, however, the demand for homes has softened. A major factor has been 30-year, fixed-rate, mortgages that were under 3% a year ago, but averaged 5.66% nationally this week, according to mortgage buyer Freddie Mac.
As buyers shelve their purchases, some sellers have been forced to lower their sights on what they’re seeking for their homes — though offers that top asking prices and multiple bids haven’t disappeared.
“It is certainly shifting from the ridiculous, hyper-drive seller’s market that we were in during the spring to a little more normal-looking market, which I would say at this point, still has a slight seller advantage,” said real estate agent Rick Van Wieren of Re/Max Properties in Colorado Springs.
That seller advantage could be bolstered by what Van Wieren said are signs the recent increase in the supply of homes for sale could ease. Fewer choices would keep the market tipped in favor of sellers.
The final few months of the year could see a continued slowing in housing appreciation rates, he said.
But that slowdown won’t necessarily be driven by a loss of home values; instead price increases will be held in check by buyers who are snapping up less expensive homes because higher mortgage rates make it tough for them to afford pricier properties, Van Wieren said.
“It’s as much because of a mix of homes than anything else,” Van Wieren said of the potential for slower price gains. “I don’t think it’s a case that your $700,000 home is now only worth $650,000. I think it’s more of a case of people are buying the $450,000 house, if they can find it, and they’re not buying $600,000 or $700,000 homes.”