Colorado Springs’ housing market continued to race at top speeds last month, though long-term mortgage rates that have topped 5% have caused some buyers and sellers to tap their brakes, some local real estate agents say.

“We are going to downshift, I think, from the 120-mile-an-hour Autobahn to maybe more like an 80- mile-an-hour Wyoming interstate,” said Rick Van Wieren of Re/Max Properties in the Springs.

“It’s still going to be a pretty fast market by historical measures, but it’s not going to be as super heated as it was,” he said. “Five to 5½% interest rates do price some buyers out of the market. That has an impact.”

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A Pikes Peak Association of Realtors report released this week shows that housing trends remained largely unchanged last month in the Colorado Springs area.

The median price of single-family homes that sold in May climbed to a record high of $487,000, eclipsing the previous mark of $484,450 set in April, according to the report.

Last month’s median also rose 12.7% over May 2021 — extending a streak of year-over-year price gains to 7½ years. Area median home prices now have risen each month since December 2014.

Home sales, meanwhile, totaled 1,689 in May, an 8.9% increase over the same month last year. Through the first five months of 2022, sales totaled 6,607 or 4.4% higher than the same period last year.

The supply of homes for sale climbed to 1,365 at the end of May, the most for any month since 1,390 were listed for sale in July 2020.

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Still, May’s inventory of homes for sale equated to less than a one-month supply that was available for purchase, based on the number of listings and the recent pace of sales.

May’s inventory also remained historically low; in the years before the Great Recession, May listings typically topped 3,000 and 4,000 homes, according to records maintained by The Gazette.

Those trends aside, there are a few indicators that the market has cooled somewhat because of higher homeowner borrowing costs, some real estate agents say. 

On Thursday, 30-year, fixed-rate mortgages averaged 5.09% nationally, according to mortgage buyer Freddie Mac. That’s down slightly from last week’s 5.1%, yet up significantly from 2.99% at the same time last year.

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In May, homes averaged 11 days on the market before they sold, one day longer than the same month last year, according to the Realtors Association report.

Another possible sign of a market pause: in the last seven days, 229 sellers reduced their asking prices for their homes — something that’s been rare in the market, said Van Wieren, citing Multiple Listing Service data.

“That’s an effect,” Van Wieren said. “There were months when we were seeing almost no price reductions because everybody was bidding above the asking price.”

Eddie Hurt, a real estate agent with ERA Shields Real Estate, said some buyers simply can no longer afford a home because of rising rates. He estimated 10% to 20% of buyers are being affected by the higher rates, which he called a significant portion of the market.

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“For buyers in the lower price ranges, we’re seeing some of those people get priced out of the market right now,” Hurt said. “To get the house they want, they can’t afford the mortgage payment now. We’re also seeing buyers in the higher ranges have to come down in price range Instead of buying that $800,000 house, now they’re having to buy the $700,000, $650,000 house.”

Still, the market isn’t grinding to a halt, Hurt and Van Wieren said.

Though some buyers might be getting priced out of the market, sale prices in May still were 103.13% of the list price — meaning buyers typically paid over the asking price during the month, according to Van Wieren.

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By comparison, from 2006 through 2016, buyers routinely paid less than the full asking price, Van Wieren’s data showed.

“It’s significant, but it’s not like the market is declining,” Hurt said of homebuying and selling. “It’s just slowing down a little bit.”

“I do think buyers for the last decade and then some, these are as high as the rates have ever been in the last 10 years,” Hurt added. “For people who are newer to the market, newer to the buying side of the market, it’s shocking to them and it might make them take a step back or wait.”