Possibly signaling a return to a more balanced home sales market, the average price of homes in metro Denver in May dropped from the previous month for the first time in 2022, according to the Denver Metro Association of Realtors Market Trends Report released Friday.

The average sales price for single family residential homes and condos stood at $714,495 in May, a 1% drop from April’s average. The median sales price also dropped slightly to $615,000. But those prices were still up double-digit percentages year-over-year, 14.94% for average sales price and 14.31% for median.

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Andre Abrams, chair of the Association’s Market Trends Committee, wrote in the report that the second half of 2022 could be “a return to normalization.”

Inventory also went up, which is the normal seasonal trend. There were 3,652 homes and condos for sale at the end of May, up 448 or 14% from April and a whopping 76% from May 2021. There was an even more pronounced year-over-year increase in single family home inventory, which jumped 111.68% to 2,828 in May. Average days on market ticked up to nine.

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“After consecutive months of appreciation, negotiations and bidding wars, seeing modest numbers is a sign that the market has come back to Earth,” Abrams said in the report. “Closed sales increased 3.75% from the previous month, keeping supply and demand relatively balanced. As we approach the start of summer and shift from the peak of the real estate market, we will see changes in how the market operates compared to the beginning of the year.”

The close-to-list price ratio for May was 105.33%, down from April.

“As properties that recently had price reductions go under contract and close, we anticipate that number to decrease,” Abrams said.

There were 5,445 sales in May, up 3.75% from the previous month but down 4.5% from May 2021.

“Throughout the entire market, year-to-date, we have seen 7.18% fewer homes closed than the previous year,” Abrams said in the report. “Even with fewer purchases, the market has transacted over $1 billion more in sales volume than the previous year, indicating just how high prices have soared from the previous year.

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“The effects of higher interest rates have not been visible yet and most likely will not be seen until after the summer,” said Abrams. “This could translate to more inventory, lower or flat prices and longer days (on the market).”

The association uses data from the 11-county metro Denver area market.