In a month when a late monsoon is cooling summer temperatures around the Mile High, interest rates are chilling the area’s real estate market, according to a newly released report by the Denver Metro Association of Realtors.

While real estate agents have hopes that rates will fall later in the year as inflation lessens, that’s not what they’re seeing now.

“Definitely things have slowed up a lot,” said agent Christine Gulley with Colorado Home Realty in downtown Littleton, who brought a five-bedroom home on the market this week backing to prime open space in Highlands Ranch’s McArthur Ranch area, at $848,500.

Gulley, who says she is seeing 30-year rates close to 7.5% this week, adds that she drew a turnout for her open house on the new listing Saturday, but nothing of the order that the house would have attracted in 2022 when the market was at a peak.

“It’s amazing what a year does,” Gulley added. “It would have disappeared quickly at over asking price.”

DMAR’s August Market Trends Report, released Thursday, shows sales volume was off in July by 18% over sales in July 2022, when the market had already slowed from its pandemic high.

The median price-at-sale for a single-family home last month in the 11-county Denver area stood at $650,000, down less than a percent from the previous month and exactly even with the price a year back. Meanwhile, just 4,773 new listings arrived on the market in July — the supply indicator that anticipates whether prices might drop anytime soon — down a sizable 25% from a year ago.

Analysts at DMAR see interest rates as “golden handcuffs” that are locking up the market from two directions: They keep sellers who enjoy low payments on their current houses from facing the higher rates they would face if they sell and buy something else, while they confront buyers with much higher payments than they would have had a year back.

Over 90% of current U.S. mortgages are under six percent and over 80% are under five percent, says Libby Levinson-Katz, chairwoman of DMAR’s Market Trends Committee. She notes that along with the paltry inventory arriving on the market, the number active homes for sale now has climbed 3.76%.

DMAR’s report arrived just as Fitch Ratings, one of three top ratings firms, downgraded the U.S. government’s credit rating — a move that could drive mortgage rates higher.

Jenny Apel, broker with boutique agency Nostalgic Homes in Denver’s Highlands area, said that rising rates are forcing sellers to consider offering buyers some help with their financing, something that would have been rare in 2022.

Brokers are sometimes hesitant to tell sellers the market’s realities now, she said.

“For brokers like me who carry a substantial inventory, to deny that this market is different wouldn’t be truthful,” said Apel, who did around $65 million in sales last year.

“This is all about proper pricing,” she said. “If you don’t price correctly, we will be making reductions.”

That was the case for a large Victorian just a block from Highlands’ restaurant row along west 32nd Avenue, where Apel’s sellers had their historic listing priced at $3.2 million earlier this season, before dropping to $2.95 million to encourage more activity.

That required the sellers to reassess their situation, she said, including whether they might be doing something to help on the financing side. Ultimately, the sellers took an offer a little below the new list, while offering to pay $65,000 toward financing and closing.

“They decided they didn’t want to set the (price) record and were happy to help the buyer.”

“To get a luxury property to the finish line everybody needs to feel like a winner,” Apel said. “Buyers are watching whether the seller is paying. Buyers are sensitive to it, and it can change the picture quickly.”

DMAR’s Levinson-Katz said buyers who don’t need to sell a previous home may like the looks of a 2-1 buydown to reduce the pain. A 2-1 reduces the rate for two years, something attractive now with expectations that rates could fall in the coming year.

Colorado Home Realty’s Gulley said sellers are also becoming open minded about offering contingencies — making a sale contingent on the sale of the buyer’s own house. Contingencies involve the risk of having to pull the home off the market and then putting it back on if the other sale fails.

That’s not an option for the home Gulley has on the market in Highlands Ranch. The sellers are headed south to a pretty town they heard about in the Texas hill country near Austin, where they’ve already purchased a place.

With 2-1 buydowns available, Gulley advises buyers should still be looking seriously at purchasing now, despite prices having barely dropped over the year.

“From the buyer’s standpoint, this is the time to take advantage when you’re not competing with a ton of others,” Gulley said. “If you wait for rates to drop, you’ll have more competition and prices increasing.”

DMAR’s Market Trends report includes data for Adams, Arapahoe, Boulder, Broomfield, Clear Creek, Denver, Douglas, Elbert, Gilpin, Jefferson and Park counties. DMAR represents more than 8,000 Realtors in the metro area.