For metro Denver’s housing market, 2018 will go down as a year of fire and ice, where a very hot first half flipped into a much colder second half that held December tight in its grip.

Home and condo sales in metro Denver dropped 17.8 percent in December from November to 3,396. Comparing December 2018 with December 2017, home sales are down by 23 percent, according to the market trends report from the Denver Metro Association of Realtors.

Measured across the entire year, home sales in metro Denver fell 5.5 percent in 2018 versus 2017 and came in at their lowest volume since 2014. Higher prices, however, allowed the market to hit a record sales volume of $26.5 billion, which is 2.36 percent above the volume sold in 2017, according to the DMAR report.

“Sellers celebrated in the first half of the year with a crazy blur of multiple offers and fast sales,” Jill Schafer, head of the DMAR market trends committee and a local Realtor, said in a news release. “It was buyers’ turn to celebrate when the housing inventory jumped up in May and June, causing a market adjustment in the second half of the year and finally giving them some choices.”

As sales fell, properties lingered longer on the market and more unsold homes piled up from what were record-low inventory levels. There were 5,577 unsold homes on the market in December, up 44.7 percent from the record low set a year earlier. Compared with November, however, the inventory was down 25.9 percent, as sellers took listings off the market for the holidays.

Single-family listings spent 41 days on the market on average, while condo listings spent 35 days, compared with 37 days and 32 days a year earlier.

“The big issue right now is that we have a larger amount of inventory, which is great for buyers,” said Sunny Banka, an Aurora Realtor. The question is, where did the buyers go?

Banka said she had three listings priced under $450,000 that didn’t have much interest since Thanksgiving. But in the first three work days of this year, she has had more showings on those properties than in all of December.

“That tells me the buyers are out there,” she said, noting that her experience represents only a small slice of the market. The real test will come in late February and March, the typical start to the peak selling season. If buyers are still missing in action, then some deeper problems are afoot.

Home sellers in the second half of the year had to start making price reductions and deal with longer times on the market, which they weren’t accustomed to. Despite that, home prices found a way to keep rising, Schafer said.

The median price of a single-family home sold in December came in at $430,000, which was up only 3.3 percent from December 2017. The median price of a condo sold was $298,225, which is up 4.5 percent from December 2017.

Measured across the entire year, the average price of a single-family home sold in metro Denver was $522,839, up 8.05 percent from 2017. The average price of a condo sold increased 9.82 percent to $351,677. A continued influx of people to the state and more millennials buying homes supported those gains, Schafer said.

Higher mortgage rates, which make homes less affordable, pushed more buyers out of the game in metro Denver and nationally during the second half of the year.

The direction of interest rates will determine whether metro Denver’s housing market finds its balance again or keeps moving lower, said Gary Bauer, an independent Realtor and longtime market watcher.

The volatility in the stock market helped pushed rates down in December, all the way back to September levels. But that wasn’t enough to halt a continued slide in applications, according to an update from the Mortgage Bankers Association.

“Even with lower borrowing costs, both purchase and refinance applications decreased over the two-week holiday period, as both conventional and government applications dropped,” said Joel Kan, an executive with the MBA in the update.

Kan suspects that the partial government shutdown may also be impacting borrowers seeking Federal Housing Administration loans, which have a lower down payment and are popular with first-time buyers.

Given the prospect of longer processing times, those borrowers may just hold off, he said.