Denver just became the U.S. metro with fastest-falling home values

Good news if you’re in the market for a house in Denver… Very bad news if you’re trying ton sell one!

Home values in Denver are falling faster than in any other major metropolitan area in the country, unseating Tampa for the dubious distinction of the nation’s weakest housing market.

The S&P Cotality Case-Shiller Index, a widely tracked measure of U.S. home prices, showed Denver home values fell 2.2% in February compared to a year earlier — the steepest decline of any major metro area in the index, according to data released this week.

Tampa, which had held the bottom spot, posted the second-largest decline at 2.1%. Seattle came in third at minus 2%, followed by Phoenix at minus 1.8% and Dallas at minus 1.7%.

The data extends a troubling trend for the Mile High City’s housing market. In March, a separate index from First American Data & Analytics found the Denver region had the biggest drop in starter home prices of any major metro, with entry-level homes — the bottom third by price — averaging a 6% decline in value.

Denver’s decline is part of a broader pattern. More than half of all major U.S. metros analyzed in the Case-Shiller Index posted year-over-year home price declines in February, including Los Angeles (minus 0.8%), Portland (minus 0.9%), Las Vegas (minus 1.1%) and Washington, D.C. (minus 0.1%).

The weakness is concentrated in the Sun Belt and the West, where home prices soared during the pandemic and are now correcting under the weight of an inventory glut caused by dwindling demand and a wave of new construction.

Nationally, single-family home prices were up in 39 of 50 states, but Colorado was among the 11 states with declines. The state’s 2.9% drop tied for the fourth-largest nationally with Nevada, behind New York, Florida and California, according to First American.

The explanation comes down to supply and demand. After years in which Denver buyers competed fiercely for a thin supply of homes, the market has flipped. Inventory has risen sharply, homes are sitting longer before selling, and buyers — facing mortgage rates that have remained above 6% for three years running — have more leverage to negotiate.

In the metro Denver region, single-family homes are now averaging 83 days on the market, and inventory stands at about 2.6 months of supply, according to a February market report from the Colorado Association of Realtors.Colorado

Median prices have dropped notably in multiple Denver-area zip codes. In Original Aurora (80011), the median single-family home price fell to $412,000 — down from $445,000 in December. In Central Aurora (80013), the median dropped more than $40,000 compared to a year ago.