2024 began with optimism; mortgage interest rates would stabilize and start a slow decline, inflation would subsideallowing the Federal Reserve to reduce the federal funds rate, and buyers and sellers would re-enter the market. In reality, we saw much of the same as in 2023.
Interest rates had a bumpy ride throughout the year. We finally saw the Federal Reserve ease the federal funds rate in the third and fourth quarters of the year. Mortgage rates responded temporarily with the first-rate drop but gained no benefit from the second and third reductions; this sends us into 2025 nearly where we began in 2024, with rates in the high six percent range. Elevated interest rates have lasted longer than anticipated, and historically low rates of three percent are no longer realistic moving forward. Buyers have needed time to adjust to the affordability factors associated with the higher rates and increased home prices.
Total inventory in the market for 2024 increased 12.60 percent over 2023 but still lagged compared to 2020 through 2022. Most of this increase came from detached homes, while attached homes saw only a slight uptick. The number of detached homes sold increased 7.84 percent year-over-year. Attached homes had a decline in year-over-year sales of 15.51 percent and a 45.90 percent decrease from 2021. As we begin 2025, the market has more inventory than in recent years, giving buyers a wider variety of choices-although many of these homes have been sitting on the market for a while. The median days in MLS for active listings is 78 days, compared to 40 days for properties that sold in December. Buyers have an excellent opportunity to negotiate before the start of the spring market when buyer demand will increase.
This year, median home prices for attached and detached homes saw differing trajectories. Detached homes followed a typical annual price increase cycle in the spring months and tapered off into the 4th quarter, showing a slight upward trend and ending the year up 2.28 percent. Attached homes ended the year with a median sale price of $407,000, a decrease of 1.93 percent year-over-year. The attached market has had a unique set of circumstances to contend with. HOA dues have increased an average of about 37 percent in the Denver Metro Area since 2020; increases in insurance and repairs costs have strained HOA budgets. Condos are typically more affordable for buyers; however, the higher HOA cost adds one more challenge to the process.
We are over two years into an environment with mortgage rates over six percent with no meaningful change on the horizon. Buyers and sellers have had to adjust to the market, and in tracking mortgage applications and pending contracts with slight drops in the mortgage rates, we know that buyers are watching and waiting, and buyer demand remains cautiously high. Sellers, locked into the golden handcuffs of a historically low fixed-rate mortgage, are finding themselves unable or unwilling to postpone life changes, resulting in more inventory entering the market. While mortgage rates are not the only factor affecting market activity, they are the element that could bring about the most significant shift.
We're entering 2025 optimistic; the environment will continue to change with economic and political shifts. Realtors® are resilient and adaptable by nature, constantly evolving to meet the needs of our clients and finding opportunities in every market.
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