Sales of single-family homes and condos in Denver declined 18% compared with the same time a year ago, according to the Denver Metro Association of Realtors.
Wednesday's report showed it would take 4.7 months to exhaust the supply of existing homes on the market at the end of July.
Home prices across the US increased in the second quarter, but the pace is slowing, and homes are slowly starting to become more affordable, according to the Federal Housing Finance Agency.
Sales of previously-owned homes fell in July as tight inventory continued to weigh on the market and prices pushed higher. Sales of single-family homes and condominiums in California were down 13% in July compared with a year earlier, according to real estate tracker PropertyRadar. "This year's pace of existing home sales is still on track to be the best since 2006", Reynolds says.
Low mortgage and unemployment rates are bringing even more would-be buyers into the market, which could drive home prices, already on the rise, out of reach for many of them. July's price increase marks the 53rd consecutive month of year-over-year growth. New homes sales crushed expectations on Tuesday, while home prices disappointed ever so slightly earlier on Wednesday. The average rate has historically been closer to six percent.
Inventories have fallen on an annual basis for the past 14 months, an indication that many homeowners are still recovering financially from the housing bust that triggered the Great Recession nearly a decade ago.
Economists had expected a dip from June's cycle high to a still-strong 5.57 million pace. "What's more, those homes that are for sale are increasingly unaffordable for first-time and entry-level home buyers".
Ian Shepherdson, chief economist at Pantheon Macroeconomics, said: "The consensus always looked a bit ambitious; the pending sales index pointed to a modest correction after four straight gains". Inventory data from Realtor.com reveals that the metropolitan statistical areas where listings stayed on the market the shortest amount of time in July were Denver-Aurora-Lakewood, Colo., San Francisco-Oakland-Hayward, Calif., San Jose-Sunnyvale-Santa Clara, Calif., and Seattle-Tacoma-Bellevue, Wash., all at a median of 32 days; and Vallejo-Fairfield, Calif., at a median of 36 days. The median price in the Midwest was $194,000, up 5.0 percent from a year ago.
The sharp increase in new home sales came as a surprise to economists, who had expected sales to drop to a rate of 580,000 from the 592,000 originally reported for the previous month.
"Furthermore, with new condo construction barely budging and now making up only a small sliver of multi-family construction, sales suffered last month as condo buyers faced even stiffer supply constraints than those looking to purchase a single-family home", Yun said. The median price in the Northeast was $284,000, which is 3.3 percent above July 2015. That's down from 6% in June and 7% on the yearly basis.