Is the Denver market heating up or cooling down? When you know how inventory works, you can read the signs before prices shift. If you are planning a move, you want clarity on when to act, how to price, and how hard to negotiate. In this guide, you will learn the simple metrics that drive Denver home prices and how to use them to time your next step with confidence. Let’s dive in.
What months of inventory means
Months of inventory, or MOI, tells you how long it would take for all current listings to sell at the current pace. It is the clearest snapshot of supply and demand pressure.
- Around 6 months usually signals a balanced market.
- Under 3 months often favors sellers with tighter supply.
- Over 6 months often favors buyers with more leverage.
MOI is a guide, not a prediction. It changes with new listings, pending sales, and seasonality, so you want to track it over time.
How to calculate MOI
Use this simple formula: MOI = Active listings divided by monthly sales. Many pros use a 3‑month average of sales to smooth noise.
Illustrative example: If Denver County had 1,200 active listings and 400 sales last month, MOI would be 1,200 ÷ 400 = 3 months. That would lean seller. Always calculate MOI for your price band and area, because citywide averages can hide very different conditions.
If you want to see local trends, check the Denver Metro Association of REALTORS market stats and the Colorado Association of REALTORS regional reports. For methodology basics, see the National Association of REALTORS glossary.
Absorption rate and list-to-sale
Absorption rate is the percent of active inventory that sells each month. It is the inverse of MOI. If 25 percent of active homes sell in a month, that equals roughly 4 months of inventory. Higher absorption points to faster turnover and more price pressure.
The list-to-sale price ratio compares the final sale price to the last list price. Over 100 percent means homes are closing above list. Between 95 and 99 percent suggests modest buyer concessions. Below 95 percent signals stronger buyer leverage. Confirm whether your data source uses original list price or the latest list price after reductions.
Why these numbers move prices
- Low MOI with high absorption: more multiple offers, shorter timelines, and upward pressure on prices.
- Around 6 months MOI: balanced expectations, normal negotiation, and fewer extreme outcomes.
- High MOI with low absorption: more price reductions, longer days on market, and more seller concessions.
Denver patterns to know
Denver is a collection of micro-markets. Entry-level single-family homes often absorb faster than luxury segments, especially when mortgage rates limit buying power. Condos can move differently from detached homes in periods of higher rates or softer investor demand. Central neighborhoods can have different rhythms than suburban pockets. Price band and property type matter.
Local structure plays a role too. Denver County has limited land for new single-family lots compared to the outer suburbs, which can keep in-county supply tight. Permitting and zoning policies influence how quickly new supply comes online. A lot of recent new construction has been multifamily, which can mean different inventory dynamics for condos versus detached homes. You can explore permitting context through the City’s Community Planning and Development permits page.
Mortgage rates and jobs
Mortgage rates change buying power quickly. When rates rise, the same payment buys less home, which can lift MOI and soften prices if new supply grows faster than demand. Track rate trends through the Freddie Mac Primary Mortgage Market Survey. Employment and migration also matter. Strong local job growth supports demand and can reduce MOI. For state labor trends, visit the Colorado Department of Labor and Employment data hub.
Seasonality is real in Denver. Spring often brings a surge in new listings and transactions. That can temporarily raise MOI even in a strong year, so read weekly and monthly numbers together before you assume a trend.
Read your price band first
Citywide metrics are helpful, but your decisions should follow your price bracket and property type. Here is a simple monitoring routine.
Weekly checks for active shoppers
- New listings in your exact neighborhoods and price band.
- Pending-to-new listings ratio for the week to gauge competition.
- Recent days on market for similar homes.
Why weekly? These numbers move fast and show current demand.
Monthly checks for planning
- Months of inventory overall and for your price band.
- Median list-to-sale ratio and median days on market.
- New listings and closed sales counts using a 3‑month rolling average to smooth noise.
- Price band breakdowns, especially entry-level versus luxury.
How to read changes
- MOI falling for 2 to 3 months plus shorter days on market and rising list-to-sale ratio usually means growing seller leverage and upward price pressure.
- MOI rising for 2 to 3 months plus longer days on market and more price reductions usually means growing buyer leverage and downward pressure.
- If lower price tiers are tight but higher tiers are soft, expect bidding in affordable segments and slower movement in luxury.
Strategy playbook by inventory level
Low MOI under 3 months
- Buyers: secure a strong pre-approval, tighten inspection timelines, consider escalation language, and stay flexible on closing.
- Sellers: price to drive early showings, position for multiple offers, and be selective with contingencies.
Balanced MOI around 6 months
- Buyers: negotiate normal inspection and appraisal terms and expect some competition but not a sprint.
- Sellers: price slightly ahead of comps, stage well, and market aggressively to avoid reductions.
High MOI over 6 months
- Buyers: ask for concessions, keep full inspection protections, and take time to compare options.
- Sellers: consider price adjustments, offer incentives or repairs, and keep showings flexible.
Quick example: from data to decision
Illustrative numbers: Say your target in Denver County has 1,200 active listings and 400 monthly sales. That is 3 months of inventory and a 33 percent monthly absorption rate. If the median last list price is $600,000 and the median sale price is $612,000, then the list-to-sale ratio is about 102 percent. In that setup, you would plan for tight timelines and strong terms as a buyer, or price to spark early interest as a seller.
If, instead, MOI rises to 7 months and list-to-sale shifts to 98 percent with longer days on market, buyers gain leverage. You would widen your search, negotiate credits, and keep full inspections as a buyer. As a seller, you would review pricing weekly, refresh marketing, and consider incentives.
What to check before you list or buy
- Active listings in Denver County and in your exact price band.
- Closed sales over the last 30 and 90 days for similar homes.
- New listings count in the last 30 days.
- Median days on market and list-to-sale ratio in your area.
- Mortgage rate trend from the Freddie Mac PMMS.
- Local permitting trend via Denver Community Planning and Development.
- County-wide context from DMAR market trends and CAR market reports.
Put Denver data to work for you
Numbers do not buy or sell a home, but they shape your odds, timing, and negotiation power. When you track MOI, absorption, days on market, and list-to-sale by your price band, you make cleaner decisions and avoid costly guesswork. If you want a clear read on your block and a plan that fits your move, let’s talk strategy.
Ready to see where you stand? Get your free home valuation and a custom market brief for your price band. Reach out to Sam Calhoun to get started.
FAQs
What is months of inventory in Denver and why it matters
- It estimates how long current listings would take to sell at today’s pace, which signals whether buyers or sellers have more leverage and where prices may trend.
How do I calculate months of inventory for my neighborhood
- Divide active listings by the number of homes sold in the last month, or use a 3‑month average of sales to smooth the pace and compare it by price band.
What list-to-sale ratio should I watch in Denver
- Over 100 percent suggests competitive bids above list, 95 to 99 percent suggests modest buyer discounts, and below 95 percent signals stronger buyer leverage.
How do mortgage rates change Denver prices and inventory
- Higher rates reduce buying power, which can increase MOI and slow price growth; you can track rate trends in the Freddie Mac PMMS.
Where can I find reliable Denver housing data each month
- Start with DMAR market trends and CAR reports, then layer in your neighborhood’s MLS data for a price-band view.
