Prospective homebuyers in metro Denver are testing the waters again after being sidelined by skyrocketing mortgage rates, according to a new report from the Denver Metro Association of Realtors.
The number of houses that are pending sale, meaning a contract has been signed but the deal hasn't closed, rose more than 42% in January from the prior month, the report shows. The number of homes hitting the market almost doubled the data shows.
The Denver housing market is showing signs of thawing after going cold last year as mortgage rates surpassed 7%. Higher rates mean monthly payments go up, making it harder to buy a home.
The real estate agent association reports that homebuyers with $3,000 to spend on monthly mortgage payments gained about $40,000 in purchasing power in January as mortgage rates dropped from the highest level in decades. Still, the cost of a 30-year mortgage remains well above where it was two years ago.
Federal regulators started lifting interest rates in March 2022 to stamp out inflation. Mortgage rates move in tandem with rates set by the U.S. central bank, although they frequently move before the new policy is enacted as lenders anticipate what's likely to happen next. Since this summer, central bank policymakers have kept interest rates unchanged but haven't said when they will start to reduce them.
The central bank is expected to start cutting interest rates sometime this year.
"When rates do start declining, this will be much-needed relief," Denver realtor Libby Levinson-Katz said in the report.
Housing prices in and around Denver have stayed high despite higher borrowing costs. The median home price at the end of January was $565,000, almost 5 percent higher than a year ago.
