Metro Denver's housing market may be headed toward balance, where conditions favor both the buyer and the seller.
That's according to Steve Danyliw, chair of the Denver Metro Association of Realtors (DMAR) committee, who added that high prices are causing affordability concerns with buyers.
Housing prices in the Denver-area market have been climbing for years, with May and June seeing record-high prices. Prices have since dropped 4.9 percent, according to DMAR's monthly housing report released Tuesday.
The report also noted that the number of sold listings decreased 28.91 percent compared to the month prior, and is down 20.24 percent from last September.
"Even with decreasing sales, it is my opinion we are not heading towards a bubble," Danyliw said. "Prices and sales are down month over month for the last three months, but this is normal seasonality."
A housing bubble refers to a run-up of housing prices fueled by things like demand and speculation. Economists often point to the housing bubble as a big factor in the Great Recession of 2007-2009.
Supply in the market continues to climb, up 16.1 percent year-over-year. Year-to-date, new listings are 1.36 percent above last year, while sold listings are down 3.04 percent.
"Supply is on the rise and sales are dropping," Danyliw said. "More homes available will cause the rate of prices to grow at a slower pace."
Danyliw added that mortgage rates are also on the rise, adding to the affordability issue.
"Inventories will remain high as buyers face increased difficulties affording a home," he said.
Despite the growth in inventory, Danyliw said he expects that the metro Denver housing market to experience continued price growth above 5 percent for Q4 of 2018.
The average price for a single-family home stands at $502,034, down 3.79 percent month-over-month. The median price decreased by 2.73 percent to $428,000, according to the report.