• The median sales price increased 2.7 percent to $389,900
• Signed purchase agreements fell 10.5 percent; new listings down 2.8 percent
• Sellers still getting strong offers at 100.0 percent of their list price

(September 15, 2023) – According to new data from Minneapolis Area REALTORS® and the Saint Paul Area Association of REALTORS®, home prices rose modestly in August. Both buyer and seller activity were lower compared to last year.

Sales & Prices

Pending home sales—or listings with accepted offers—were down 10.5 percent compared to last August. While those declines have moderated, it’s mostly due to comparing to a lower baseline last year as sales were slowing due to rising interest rates causing affordability challenges. Closed sales fell 11.6 percent overall, but townhomes had the smallest decline of any property type while new home sales rose an impressive 33.2 percent. Existing homeowners are choosing to stay put instead of trading up for a substantially higher monthly payment driven by rising prices and mortgage rates. That means builders listing new homes are benefiting from a shift in demand to new construction.

Home prices were down slightly in April and May, up slightly in June, and flat in July. The August median home price was up 2.7 percent from August 2022, up 20.0 percent from August 2021 and up 32.3 percent from August 2020. It’s not clear whether softening prices will continue, that depends on rates and demand. Of the homeowners who did sell their properties, they received an average of 100.0 percent of list price after 32 days on market. Market times were up 18.5 percent from last year, yet homes are still selling faster than in August of 2018 and 2019 and the same pace as 2020. “Not to oversimplify, but prices are rising because we still have a decent number of buyers competing for an insufficient number of homes,“ said Brianne Lawrence, President of the Saint Paul Area Association of REALTORS®. “Sellers of existing homes staying put forces some buyers to look at new homes or consider other more affordable property types such as townhomes, although affordability does vary within that segment.”

Listings and Inventory

In August, sellers listed only 2.8 percent fewer homes than last year, which is the smallest decline since May 2022 and a possible sign some existing supply could start to loosen up. Part of that is also due to a low baseline level. Inventory levels still slid 11.8 percent as of the most recent data. Sellers who locked in low interest rates are reluctant to give them up. “There’s always a certain level of activity in the market because of family changes, economic reasons or relocations to name a few,” said Jerry Moscowitz, President of Minneapolis Area REALTORS®. “But some less motivated buyers without that urgency are looking more cautiously at budgets and monthly payments.”

The balance between buyers and sellers has remained tight because both sales and listings have come down together. There were just over 8,000 active listings at the end of August; that needs to be closer to 20,000 to have a balanced market. At a still-low 2.2 months supply of inventory, buyers don’t have the upper hand some thought they would. Typically 4-6 months of supply are needed to reach a balanced market.

Location & Property Type

Market activity varies by area, price point and property type. New home sales rose 21.1 percent while existing home sales fell 13.9 percent. Single family sales were down 13.5 percent, condo sales decreased 9.0 percent and townhome sales were down just 3.2 percent. Sales in Minneapolis declined 17.0 percent while Saint Paul sales fell 11.5 percent. Cities such as Rogers, Otsego, Medina and Victoria saw the largest sales gains while Red Wing, East Bethel and Columbia Heights all had notably lower demand than last year.

For more information on weekly and monthly housing numbers visit www.mplsrealtor.com or www.spaar.com

August 2023 Housing Takeaways (compared to a year ago)

• Sellers listed 6,077 properties on the market, a 2.8 percent decrease from last August
• Buyers signed 4,468 purchase agreements, down 10.5 percent (4,983 closed sales, down 11.6 percent)
• Inventory levels shrank 11.8 percent to 8,111 units
• Month’s Supply of Inventory rose 15.8 percent to 2.2 months (4-6 months is balanced)
• The Median Sales Price was up 2.7 percent to $389,900
• Days on Market rose 18.5 percent to 32 days, on average (median of 15 days, unchanged from last year)
• Changes in Sales activity varied by market segment
  • Single family sales decreased 13.5 percent; condo sales were down 9.0 percent; townhouse sales fell 3.2 percent
  • Traditional sales declined 11.9 percent; foreclosure sales rose 178.9 percent to 53; short sales were flat at 7
  • Previously owned sales were down 13.9 percent; new construction sales increased 21.1 percent
  • Sales under $500,000 fell 13.6 percent; sales over $500,000 were down 4.3 percent

From The Skinny Blog.

• The median sales price remained flat at $375,000
• Signed purchase agreements fell 9.5 percent; new listings down 16.0 percent
• Sellers accepted offers for an average of 100.8 percent of their list price

(August 15, 2023) – According to new data from Minneapolis Area Realtors® and the Saint Paul Area Association of REALTORS®, home prices were flat in July. Both buyer and seller activity were lower compared to July 2022.

Sales & Prices

Home prices were down slightly in April and May, up slightly in June, and flat in July. April marked the first year-over-year price decline since February 2012. The typical home price is now up 7.1 percent from 2021, up 20.0 percent from 2020 and up 32.3 percent from 2019. But market dynamics always vary by price point, property type and location. Signed purchase agreements fell 9.5 percent from last July when buyer activity had already declined in the face of higher rates. Closings were down 21.4 percent but are a lagging indicator. As a more forward-looking indicator, pending sales are a more timely measure.

Of the sellers that did list and sell their properties, they received an average of 100.8 percent of list price after 29 days on market. This reflects a persistently tight supply picture. Homes are still selling faster than in July of 2018, 2019 and 2020. “It still surprises me how often I hear and read about a crash,” said Brianne Lawrence, President of the Saint Paul Area Association of REALTORS®. “Prices flattening out and homes spending longer on market combined with a possible downtick in rates could be just the medicine the doctor ordered for frustrated buyers.”

Listings and Inventory

July sellers listed 16.0 percent fewer homes on the MLS than last year. Inventory levels slid a similar 16.1 percent. Would-be sellers are faced with a unique decision: stay put in a home that no longer meets their needs or take their equity and embrace higher prices and rates until refinancing. Sellers are feeling the “golden handcuffs” and are reluctant to swap a 3.0 percent rate for 7.0 percent. “When is the best time to buy a home? When you’re ready,” said Jerry Moscowitz, President of Minneapolis Area Realtors®. “Focus on what you can’t change such as layout and location. Rooms can be repainted. Counters and appliances can be updated. Loans can be refinanced.”

Both supply and demand have come down in unison, meaning the balance between buyers and sellers remains tight. Inventory levels fell 16.1 percent in July to 7,842 active listings. The market still favors sellers, but not to the same degree as the last few years. The market has 2.1 months supply of inventory but typically 4-6 months of supply are needed to achieve a balanced market.

Location & Property Type

Market activity varies by area, price point and property type. New home sales rose 61.8 percent while existing home sales were down 13.5 percent. Single family sales fell 11.6 percent, condo sales were flat and townhome sales were down 4.5 percent. Sales in Minneapolis decreased 12.7 percent while Saint Paul sales fell 13.8 percent. Cities such as Mounds View, St. Anthony, Zumbrota and Vadnais Heights saw the largest sales gains while Hudson, Cambridge, New Richmond and Monticello all had notably lower demand than last year.

July 2023 Housing Takeaways (compared to a year ago)

• Sellers listed 5,823 properties on the market, a 16.0 percent decrease from last July
• Buyers signed 4,408 purchase agreements, down 9.5 percent (4,387 closed sales, down 21.4 percent)
• Inventory levels shrank 16.1 percent to 7,842 units
• Month’s Supply of Inventory rose 10.5 percent to 2.1 months (4-6 months is balanced)
• The Median Sales Price was flat at $375,000
• Days on Market rose 31.8 percent to 29 days, on average (median of 12 days, up 9.1 percent)
• Changes in Sales activity varied by market segment
  • Single family sales decreased 11.6 percent; condo sales were flat & townhouse sales fell 4.5 percent
  • Traditional sales declined 9.9 percent; foreclosure sales rose 95.0 percent to 39; short sales rose 233.3 percent to 10
  • Previously owned sales were down 13.5 percent; new construction sales increased 61.8 percent
  • Sales under $500,000 fell 11.7 percent; sales over $500,000 gained 1.3 percent

From The Skinny Blog.

• The median sales price was up 0.5 percent from last June to $382,000
• Signed purchase agreements fell 10.8 percent; new listings down 16.5 percent
• Sellers accepted offers for an average of 101.3 percent of their list price

(July 16, 2023) – According to new data from Minneapolis Area REALTORS® and the Saint Paul Area Association of REALTORS®, home prices rose slightly in June. Both buyer and seller activity were also lower compared to last June.

Sales & Prices

Prices were down slightly in April and May but up 0.5 percent in June. April marked the first year-over-year price decline since February 2012. Half of all homes sold for over $382,000. But as in April and May, sellers in June still accepted offers above list price despite a decline in sales—a dynamic that reflects the lack of supply despite rising mortgage rates. Sellers received offers at 101.3 percent of their asking price. Market times—while up—still reflect a relatively fast-paced market. Half the sales went under contract in under 12 days. And homes are still selling faster than in June 2018, 2019 and 2020.

“Some remain convinced of an impending crash, but we’re still not seeing it,” said Brianne Lawrence, President of the Saint Paul Area Association of REALTORS®. “Two months of prices softening around 1.0 percent before climbing again is more like a blip or pause than a downturn.” But the Fed-driven decline in demand persists. As we compare to slower months of 2022, the sales declines have moderated. Pending sales dipped 10.8 percent; closed sales fell 18.0 percent.

Listings and Inventory

June sellers brought 16.5 percent fewer new listings to market than last year. Inventory levels slid 9.0 percent lower. Some sellers are choosing to stay put and wait instead of selling for a lower price. Most sellers are also buyers and are reluctant to trade away their 3.0 percent interest rate for 6.8 percent. “Even with fewer sales in light of higher rates, homes are still selling relatively quickly while sellers get relatively strong offers,” said Jerry Moscowitz, President of Minneapolis Area REALTORS®. “That’s partly driven by homeowners with rates under 4.0 percent staying put.”

Both supply and demand have come down in tandem, meaning the balance between buyer and seller activity has remained tight. Inventory levels fell 13.4 percent in June to 7,492 active listings. The market still favors sellers, but not to the same degree as the last few years. Our 2.0 months supply of inventory was up 17.6 percent. Typically 4-6 months of supply are needed to achieve a balanced market.

Location & Property Type

Market activity varies by area, price point and property type. New home sales rose 24.3 percent while existing home sales were down 12.8 percent. Single family sales fell 13.7 percent, condo sales declined 3.2 percent and townhome sales were up 0.8 percent. Sales in Minneapolis decreased 12.1 percent while Saint Paul sales fell 12.9 percent. Cities such as Annandale, Shorewood, White Bear Township and Delano saw the largest sales gains while White Bear Lake, New Hope, New Prague, Zimmerman and Hudson all had notably lower demand than last year.

June 2023 Housing Takeaways (compared to a year ago)

• Sellers listed 6,664 properties on the market, a 16.5 percent decrease from last June
• Buyers signed 4,997 purchase agreements, down 10.8 percent (5,343 closed sales, down 18.0 percent)
• Inventory levels shrank 13.4 percent to 7,492 units
• Month’s Supply of Inventory rose 17.6 percent to 2.0 months (4-6 months is balanced)
• The Median Sales Price rose 0.5 percent to $382,000
• Days on Market rose 47.6 percent to 31 days, on average (median of 12 days, up 50.0 percent)
• Changes in Sales activity varied by market segment
  • Single family sales decreased 13.7 percent; Condo sales were down 3.2 percent & townhouse sales rose 0.8 percent
  • Traditional sales declined 11.0 percent; foreclosure sales rose 76.0 percent (44); short sales decreased 33.3 percent (4)
  • Previously owned sales were down 12.8 percent; new construction sales rose 24.3 percent
  • Sales under $500,000 fell 12.9 percent; sales over $500,000 declined 0.4 percent

From The Skinny Blog.

• The median sales price was down 1.3 percent from last May to $370,000
• Signed purchase agreements fell 19.3 percent; new listings down 17.6 percent
• Sellers accepted offers for an average of 101.1 percent of their list price

(June 15, 2023) – According to new data from Minneapolis Area REALTORS® and the Saint Paul Area Association of REALTORS®, home prices dipped slightly from last May. Both buyer and seller activity were also lower compared to last year.

Sales & Prices

Prices were flat in April and down slightly in May. As in April, May sellers still accepted offers above their list price despite a decline in sales—a dynamic that reflects the persistently tight balance between supply and demand even in light of rising mortgage rates. While some sellers are still seeing multiple offers on well-presented listings, the offers were closer to 1.0 percent over list price versus 4.0 percent over list price last May. With half the homes selling in under 13 days, market times are up as demand has waned. And yet, homes are still selling faster than in May of 2019 and 2020.

Pending sales dipped 19.3 percent; closed sales fell 28.1 percent. Condo sales showed the largest drop while townhomes saw the smallest decline. Single family homes sold at a median of $405,000, townhomes at $311,000 and condos at $205,000. New home sales were flat while existing home sales were down. New homes sold for $461,000 while existing homes sold for $355,000. Sales under $500,000 decreased 20.4 percent while sales over $1M fell just 6.6 percent.

Home prices are up 25.5 percent since May 2020, but down 1.3 percent from May 2022. “It’s important to keep things in perspective,” said Jerry Moscowitz, President of Minneapolis Area REALTORS®. “The median price simply reflects the middle or typical home selling, but every home is unique. In some ways, this pause gives buyers some room to be more selective on the listings that really stand out.”

Listings and Inventory

In May, sellers brought 17.6 percent fewer new listings online than last year—the smallest decline in four months. Inventory levels slid 9.0 percent lower. Some sellers are choosing to stay put and wait instead of selling for a lower price. Most sellers are also buyers and are reluctant to trade away their 3.0 percent interest rate for 6.8 percent. “While rates are surely a factor in decision-making, don’t lose sight of other factors like changes in lifestyle, a new job, growing or shrinking households, separations and so on,” said Brianne Lawrence, President of the Saint Paul Area Association of REALTORS®. “Economists’ interest rate forecasts vary widely; nobody knows what will happen. If you buy and rates go down you can refinance, if they go up, you’ll be glad you didn’t wait. We’re still below the average 30-year mortgage interest rate over the last 50 years.”

Sellers are also still getting good offers fairly quickly. At a median of 13 days, homes are still selling even faster than in May 2020—there are just fewer sales. But, there are also fewer listings. Both supply and demand downshifting together means the balance between buyer and seller activity has remained tight. And those sellers accepted offers at 101.1 percent of their list price—down from 104.1 percent from last May but clearly still a strong figure. The Twin Cities metro remains a seller’s market, just not to the same degree as last year. The 1.8 months supply of inventory for May was up 28.6 percent. Typically 4-6 months of supply are needed to achieve a balanced, neutral market.

Location & Property Type

Market activity varies by area, price point and property type. New home sales rose 34.6 percent while existing home sales were down 23.0 percent. Single family sales fell 23.6 percent, condo sales declined 8.5 percent and townhome sales were down 3.9 percent. Sales in Minneapolis decreased 13.1 percent while Saint Paul sales fell 29.8 percent. Cities such as Watertown, Medina, Corcoran, Dayton and Shakopee saw the largest sales gains while Buffalo, Monticello, Cambridge and Zimmerman all had notably lower demand than last year.

For more information on weekly and monthly housing numbers visit www.mplsrealtor.com or www.spaar.com

May 2022 Housing Takeaways (compared to a year ago)

• Sellers listed 6,645 properties on the market, a 17.6 percent decrease from last May
• Buyers signed 4,901 purchase agreements, down 19.3 percent (3,994 closed sales, down 28.1 percent)
• Inventory levels shrank 9.0 percent to 6,864 units
• Month’s Supply of Inventory rose 28.6 percent to 1.8 months (4-6 months is balanced)
• The Median Sales Price softened 1.3 percent to $370,000
• Days on Market rose 65.2 percent to 38 days, on average (median of 13 days, up 85.7 percent)
• Changes in Sales activity varied by market segment
  • Single family sales decreased 23.6 percent; Condo sales were down 8.5 percent & townhouse sales fell 3.9 percent
  • Traditional sales declined 19.6 percent; foreclosure sales rose 67.9 percent; short sales decreased 33.3 percent (12 to 8)
  • Previously owned sales were down 23.0 percent; new construction sales rose 34.6 percent

  
  From The Skinny Blog.

• The median sales price was down 0.7 percent to $367,500
• The average market time was up 60.7 percent to 45 days
• New listings down 27.9 percent; pending sales down 28.8 percent

(May 17, 2023) – According to new data from Minneapolis Area REALTORS® and the Saint Paul Area Association of REALTORS®, home prices dipped slightly from last April. Both buyer and seller activity were also lower compared to last year.

Sales & Prices

Prices were flat in March and down less than 1.0 percent in April. Despite a slight softening in prices, sellers were still getting offers above their list price, on average (100.1 percent) despite a 28.8 percent decline in sales. These two dynamics seem to portray conflicting pictures. While still present, bidding wars this year haven’t been as extreme as they have over the last couple years. Luxury market activity also cooled slightly more than the rest of the market—though it’s too early to label this a trend. Townhomes tend to sell for about 25.0 percent less than single family homes and made up the largest share of overall closed sales since 2006. This is mostly due to sales in other segments cooling faster than townhomes, but still impacts overall prices.

Home prices are up 28.1 percent since March 2020 but down 0.7 percent from April 2022. “Homeowners sometimes panic when prices soften while buyers often rejoice,” said Jerry Moscowitz, President of Minneapolis Area REALTORS®. “But it’s important to remember that it simply reflects the cross section of homes selling and doesn’t necessarily affect your home’s value. That’s why home buyers should have at least a 5-7 year timeframe.” Sellers are also still getting solid offers in a reasonable timeframe. Some buyers are choosing smaller homes with fewer bedrooms to contain their monthly mortgage payments. At a median of 17 days, homes are still selling as quickly as they did in April 2020. There are just fewer of those sales. But there are also fewer listings. Both supply and demand downshifting together means the balance between buyer and seller activity remains tight as the market remains undersupplied.

Listings and Inventory

In April, sellers brought 5,170 new listings online or 27.9 percent fewer than last year. Inventory levels trickled 4.5 percent lower. Some sellers are choosing to stay put and wait instead of selling for a lower price. Most sellers are also buyers and higher mortgage rates have harmed affordability significantly. “Make no mistake: multiple offers are still happening, and some properties are selling in a few days or less for well over asking,” said Brianne Lawrence, President of the Saint Paul Area Association of REALTORS®. “But this new environment means buyers are being more selective and budget minded.”

The Twin Cities metro is still a seller’s market, just not to the same degree as last year. April’s months supply of inventory was up an even 25.0 percent. That meant we had 1.5 months’ supply of inventory at month-end. Typically 4-6 months of supply are needed to reach a balanced, neutral market.

Location & Property Type

Market activity varies by area, price point and property type. New home sales rose 20.0 percent while existing home sales were down 32.9 percent. Single family sales fell 31.5 percent, condo sales declined 36.1 percent and townhome sales were down 14.4 percent. Sales in Minneapolis decreased 36.4 percent while Saint Paul sales fell 28.6 percent. Cities like North Branch, White Bear Township, Watertown and Mahtomedi saw the largest sales gains while Carver, New Brighton, North St. Paul, Hugo and Lake Elmo all had notably lower demand than last year.

April 2022 Housing Takeaways (compared to a year ago)

• Sellers listed 5,170 properties on the market, a 27.9 percent decrease from last April
• Buyers signed 4,029 purchase agreements, down 28.8 percent (3,263 closed sales, down 32.2 percent)
• Inventory levels shrank 4.5 percent to 6,155 units
• Month’s Supply of Inventory rose 25.0 percent to 1.5 months (4-6 months is balanced)
• The Median Sales Price slipped 0.7 percent to $367,500
• Days on Market rose 60.7 percent to 45 days, on average (median of 17 days, up 112.5 percent)
• Changes in Sales activity varied by market segment
  • Single family sales decreased 31.5 percent; Condo sales were down 36.1 percent & townhouse sales fell 14.4 percent
  • Traditional sales declined 29.1 percent; foreclosure sales rose 5.9 percent; short sales increased 100.0 percent (3 to 6)
  • Previously owned sales decreased 32.9 percent; new construction sales rose 20.0 percent

From The Skinny Blog.

• Median sales price of Twin Cities homes rose 0.6 percent to just under $342,000
• Buyer activity down 23.6 percent with 2,932 pending sales
• Sellers listed 24.3 percent fewer homes compared to last February

(March 15, 2022) – According to new data from Minneapolis Area REALTORS® and the Saint Paul Area Association of REALTORS®, the median sales price across the Twin Cities grew 0.6 percent to $342,000. Home price growth has flattened out in the face of higher mortgage rates and deteriorating affordability.

Inventory & Home Prices

Although home prices have flattened out, they were still up slightly year-over-year. It’s possible that home prices soften in the coming months if rates rise further or remain sticky. “People should understand that their home hasn’t necessarily lost value simply because the median price falls,” according to Jerry Moscowitz, President of Minneapolis Area REALTORS®. “The median reflects the mid-point where half the homes sell for more and half for less. If there are more luxury properties, new homes or condos selling, that all impacts prices. So does supply and demand.”

Home buyers have been able to purchase bigger, nicer homes when rates were low because the payment allowed them to. That’s changed. Buyers are more willing to look at other property types, smaller homes and in different areas. That doesn’t mean every home out there is worth any less, but likely means those that do sell may have to be flexible and make some concessions.

Given the pullback in sales, we had 7.1 percent more homes on the market at month-end. Before buyers celebrate more options, the metro only has 1.3 month’s supply of inventory. Typically 4-6 months of supply are needed to reach a balanced market. Since both sales and listings have come down in tandem, the market remains fairly thin. That said, sellers don’t quite have the leverage they’ve enjoyed of late.

Sales & Listings

The Federal Reserve’s rate hikes have taken a toll on home sales. As some buyers were sidelined by higher mortgage rates and increased monthly payments, resulting in 2,932 purchase agreements, 23.6 percent below last year. The decline in pending sales is the second smallest since July 2022—behind January of this year and hinting that perhaps the declines are easing. “We’re in a place where buyers have more leverage but lowball offers likely won’t be successful,” said Brianne Lawrence, President of the Saint Paul Area Association of REALTORS®. “That means buyers are writing offers at or slightly below list price and they can take more time to decide on what works best for them.”

Sellers brought 3,423 homes on the market in February, 24.3 percent fewer listings than last year. Half of all sellers sold their listings for over 98.2 percent of list price compared to 100.0 percent last year. And they accepted those offers after an average of 62 days on market compared to 44 last year.

Location & Property Type

Market activity varies by area, price point and property type. New home sales fell 9.2 percent while existing home sales were down 25.7 percent. Single family sales fell 26.2 percent, condo sales declined 36.0 percent and townhome sales were down 6.4 percent. Sales in Minneapolis decreased 35.0 percent while Saint Paul sales fell 33.7 percent. Cities like Corcoran, Buffalo, Watertown and St. Francis saw the largest sales gains while Hudson, Forest Lake and Carver all had notably lower demand than last year.

February 2022 Housing Takeaways (compared to a year ago)

• Sellers listed 3,423 properties on the market, a 24.3 percent decrease from last February
• Buyers signed 2,932 purchase agreements, down 23.6 percent (2,295 closed sales, down 20.3 percent)
• Inventory levels grew 7.1 percent to 5,327 units
• Month’s Supply of Inventory rose 44.4 percent to 1.3 months (4-6 months is balanced)
• The Median Sales Price rose 0.6 percent to $342,000
• Days on Market rose 40.9 percent to 62 days, on average (median of 44 days, up 131.6 percent)
• Changes in Sales activity varied by market segment
  • Single family sales decreased 26.2 percent; Condo sales were down 36.0 percent & townhouse sales fell 6.4 percent
  • Traditional sales declined 23.9 percent; foreclosure sales rose 10.3 percent; short sales increased by 8 units
  • Previously owned sales decreased 25.7 percent; new construction sales declined 9.2 percent

  
  From The Skinny Blog.

• Median sales price of Twin Cities homes rose 2.7 percent to just under $342,000
• Buyer activity down 19.3 percent with 2,560 pending sales
• Sellers listed 10.6 percent fewer homes compared to last January

(February 15, 2022) – According to new data from Minneapolis Area REALTORS® and the Saint Paul Area Association of REALTORS®, the median sales price across the Twin Cities grew 2.7 percent to $341,995. The metro is returning to historic trends for median home price growth.

Inventory & Home Prices

The Twin Cities’ median home price grew 2.7 percent despite 19.3 percent fewer signed contracts. After about three straight years of roughly 10.0 percent year-over-year price growth, this modest increase is more aligned with the historical average of 3.2 percent across the region. While price growth is slowing, it remained positive throughout 2022 and this year is expected to continue that trend of moderating growth, barring any unforeseen circumstances.

“Anyone concerned about runaway home prices should be comforted by the more typical price growth we’re seeing, which gives buyers a chance to catch their breath and incomes a chance to catch up,” said Brianne Lawrence, President of the Saint Paul Area Association of REALTORS®. “While the Twin Cities remains a seller’s market, homes are taking longer to sell and sellers are accepting less than their list price.”

Softening buyer activity led to 14.5 percent more homes on the market at month-end, closing out January with 5,588 units in inventory. Yet we remain undersupplied—especially if interest rates moderate in response to inflation subsiding and demand once again soars. The metro only has 1.3 month’s supply of inventory. Typically 4-6 months of supply are needed to reach a balanced market.

Sales & Listings

As the market reacts to a series of aggressive rate hikes by the Federal Reserve in an effort to slow borrowing and cool an overheated economy, home buyer activity has also cooled. Facing higher mortgage rates and monthly payments than they would have in 2022, buyers signed 2,560 purchase agreements, 19.3 percent fewer than last year. Meanwhile 2,083 homes closed, down 32.2 percent from last year and the lowest figure since 2010. But that reflects contracts signed 30 to 60 days earlier.

“Sellers need to be priced right and may not see a dozen plus offers immediately, but most sellers are getting deals done with terms they’re comfortable with, and still more quickly than in the past,” according to Jerry Moscowitz, President of Minneapolis Area REALTORS®. “The truth is, what feels like a slow-down from light speed is actually close to how the market used to and probably should feel. You know, there’s actually a chance that listing you’ve been eyeing will be there later tonight or even tomorrow!”

There were 3,285 homes listed in January, 10.6 percent fewer listings than January 2022. Last month, half of all sellers sold homes for at or below 97.3 percent of their list price compared to 100.0 percent last year. Additionally, they accepted those offers after an average of 60 days on market compared to 41. Today’s sellers should be patient, flexible and ensure their expectations are in-line with market realities.

Location & Property Type

Market activity varies by area, price point and property type. New home sales fell 30.8 percent while existing home sales were down 31.3 percent. Single family sales fell 33.3 percent, condo sales declined 5.7 percent and townhome sales were down 32.3 percent. Sales in Minneapolis decreased 25.8 percent while Saint Paul sales fell 40.2 percent. Cities like St. Michael, Andover, and Minnetonka saw the largest sales gains while Savage, Eagan, and Brooklyn Park all had notably lower demand than last year.

January 2022 Housing Takeaways (compared to a year ago)

• Sellers listed 3,285 properties on the market, a 10.6 percent decrease from last January
• Buyers signed 2,560 purchase agreements, down 19.3 percent (2,083 closed sales, down 32.2 percent)
• Inventory levels grew 14.5 percent to 5,588 units
• Month’s Supply of Inventory rose 44.4 percent to 1.3 months (4-6 months is balanced)
• The Median Sales Price rose 2.7 percent to $341,995
• Days on Market rose 46.3 percent to 60 days, on average (median of 43 days, up 95.5 percent)
• Changes in Sales activity varied by market segment
  • Single family sales decreased 33.4 percent; Condo sales were down 5.7 percent & townhouse sales fell 32.7 percent
  • Traditional sales declined 31.7 percent; foreclosure sales fell 22.6 percent; short sales fell 25.0 percent
  • Previously owned sales decreased 31.3 percent; new construction sales declined 30.8 percent

  
  From The Skinny Blog.

Higher mortgage rates and rising prices increased monthly housing costs for buyers

Minneapolis–Saint Paul, Minnesota (January 18, 2023) – The first and second half of 2022 couldn’t have looked more different, according to an annual report issued by Minneapolis Area REALTORS® and the St. Paul Area Association of REALTORS®®. After sales reached a 20-year high in 2021 while the number of homes for sale hit a 20-year low, sales in 2022 retreated to their lowest level since 2014 while housing inventory started to rise. That dynamic reflects higher mortgage rates—more than doubling from 3.25 percent to over 7.0 percent—seen in the back half of the year, and it’s rippled throughout virtually every other housing indicator. For sellers, the year still brought record sales prices despite slower increases as the year went on. But multiple offers over asking price in the first half gave way to rising market times and weaker offers in the second half.

“It felt like the housing frenzy was continuing into spring and summer, but the Fed [Federal Reserve] poured cold water on that in a hurry as inflation rose dramatically,” said Brianne Lawrence, President of the Saint Paul Area Association of REALTORS®. “In some ways that was a necessary evil, as that price and sales growth wasn’t sustainable long term. Real estate can be boom and bust like that. But over time, we’ll get back on track like we always do.”

Because 2020 and 2021 were such unique years, it’s worth comparing 2022 to a pre-COVID year. When compared to 2019, home sales in 2022 were down 10.3 percent. While market times are up compared to 2021, homes are still selling more quickly than in 2019 and 2020. One area where the cool-down is notable is in the strength of offers that sellers accept on a monthly basis. Although sellers received on average 100.9 percent of their list price for the year, they accepted 96.3 percent in December. That’s the lowest figure since December 2016.

“I went from sifting through more than 10 offers with my sellers to counseling them about being patient while on the market all within one year’s time,” said Jerry Moscowitz, President of Minneapolis Area REALTORS®. “Inflation may be turning a corner and rates could moderate by summer. If that happens, pent-up demand will surface and we’ll go right back to a competitive market with bidding wars where demand far exceeds supply.”

The ongoing supply-demand imbalance combined with rising rates and rising prices has truly exacerbated affordability concerns pricing too many out of the marketplace. The Housing Affordability Index reached its lowest level since at least 2004. But the Twin Cities is still better than most comparable metros. Currently, the regional median income is 95.0 percent of the necessary income needed to qualify for the median-priced home at today’s interest rates while avoiding becoming cost-burdened, which is typically defined as spending 30.0 percent or less of one’s pre-tax income on housing costs.

Overall, since both buyer and seller activity came down in tandem, the balance of market activity has remained relatively tight. Rising supply combined with falling demand can sometimes result in prices softening. But at $362,500, the median home price is still rising, albeit at a slower pace. New homes tended to outperform along with the over $1M luxury segment which even saw an increase in sales compared to last year. Although condo sales declined with the rest of the market, market times were flat while sellers accepted stronger offers.

While it was a year of fluctuations, tens of thousands of Minnesotans were able to get their housing goals met. As inflation cools the rate environment could ease. That could incentivize more demand that would still be faced with a shortage of supply. Housing supply is structural; housing demand is cyclical.
For other year-end residential real estate information and for stand-alone December 2022 data, please visit www.mplsrealtor.com and www.spaar.com.

2022 BY THE NUMBERS | COMPARED TO 2021

• Sellers listed 68,006 properties on the market, a 10.0 percent decrease from 2021
• Buyers closed on 53,714 properties, down 19.1 percent
• The Median Sales Price rose 6.6 percent to $362,500
• Inventory levels rose 16.2 percent to 5,914 units as of year-end
• Months Supply of Inventory was up 47.1 percent to 1.4 months of supply (5-6 months is balanced)
• Days on Market increased 10.7 percent to 31 days, on average (median of 14, up 27.3 percent)
• Changes in Sales activity varied by market segment
  • Single family sales were down 19.2 percent; condo sales fell 20.3 percent; townhome sales decreased 17.8 percent
  • Traditional sales fell 19.2 percent; foreclosure sales rose 1.5 percent; short sales were up 6.7 percent
  • Previously owned sales decreased 20.1 percent; new construction sales fell 8.3 percent
  • $1M+ luxury sales grew 7.5 percent to a record high

From The Skinny Blog.

• Buyer activity down 40.5 percent with 2,841 pending sales
• Median sales price of Twin Cities homes rose 4.1 percent to $354,000
• Sellers continued to hesitate, with 17.0 percent fewer new listings in November

(December 15, 2022) – According to new data from Minneapolis Area REALTORS® and the Saint Paul Area Association of REALTORS®, the metro saw its largest drop in year over year home sales this November, largely due to increased mortgage interest rates combined with unprecedented buyer activity in the fourth quarter of 2021.

SALES & LISTINGS

Real estate activity has cooled across the United States after a series of significant rate hikes by the Federal Reserve designed to slow borrowing in an effort to combat rising inflation. For residential real estate, that’s meant higher mortgage rates and monthly payments, which can push homeownership further out of reach for some buyers. Last month, buyers signed 2,841 purchase agreements, a staggering 40.5 percent fewer than last year and the lowest November figure in over a decade. Only 3,430 transactions closed, down 38.8 percent, which meant sellers had to be more flexible.

“Sellers are hesitant to put their home on the market because their payments would be very different,” according to Denise Mazone, President of Minneapolis Area REALTORS®. “In most cases, sellers are also then buyers, and many have chosen to stay put for now until things settle down, instead of trading up to a higher payment on a more expensive home.”

There were 3,453 homes listed in November, 17.0 percent fewer listings than November 2021. Sellers should understand that—unlike last year—they may not receive dozens of offers above asking price within hours or days of listing. Last month, half of all sellers sold homes for no more than 98.4 percent of their original listing price compared to 99.8 percent last year. Additionally, they accepted those offers after an average of 40 days on market. It’s not just the higher costs on the next home that’s concerning today’s sellers; they will need to be more patient, be willing to accept a bit less than asking price, and be prepared to sweeten the deal and/or possibly help cover some closings costs—very different dynamics than a year ago.

INVENTORY & HOME PRICES

The median home price in the Twin Cities increased by 4.1 percent to $354,000. Compared to a couple months with 10.0 percent year-over-year price growth in 2022, this moderate increase is more aligned with the historic average in the Twin Cities. While price growth is slowing, the overall direction of home prices has been positive throughout the year.

“One factor that’s kept home prices rising modestly is that seller activity has come down in tandem with sales,” said Mark Mason, President of the Saint Paul Area Association of REALTORS®. “Moderating price growth should be seen as a sign of a more sustainable market in line with longer-term trends.”

The softening in buyer activity meant 12.6 percent more homes remained on the market at month-end, closing out November with 7,629 units in inventory. Yet more supply is still needed. The metro only has 1.7 month’s supply of inventory. Typically 4-6 months of supply are needed to reach a balanced market.

LOCATION & PROPERTY TYPE

Market activity varies by area, price point and property type. New home sales fell 18.7 percent while existing home sales were down 40.2 percent. Single family sales fell 39.2 percent, condo sales declined 30.9 percent and townhome sales were down 35.3 percent. Sales in Minneapolis decreased 34.4 percent while Saint Paul sales fell 37.9 percent. Cities like Hutchinson, Medina, and Little Canada saw the largest sales gains while Savage, Monticello and Roseville all had notably lower demand than last year.

NOVEMBER 2022 HOUSING TAKEAWAYS (COMPARED TO A YEAR AGO)

• Sellers listed 3,453 properties on the market, a 17.0 percent decrease from last November
• Buyers signed 2,841 purchase agreements, down 40.5 percent (3,430 closed sales, down 38.8 percent)
• Inventory levels grew 12.6 percent to 7,629 units
• Month’s Supply of Inventory rose 41.7 percent to 1.7 months (4-6 months is balanced)
• The Median Sales Price rose 4.1 percent to $354,000
• Days on Market rose 33.3 percent to 40 days, on average (median of 24 days, up 50.0 percent)
• Changes in Sales activity varied by market segment
  • Single family sales decreased 39.2 percent; Condo sales were down 30.9 percent & townhouse sales fell 35.3 percent
  • Traditional sales declined 38.5 percent; foreclosure sales rose 40.0 percent; short sales rose 150.0 percent (2 to 5 units)
  • Previously owned sales decreased 40.2 percent; new construction sales declined 18.7 percent

  
  From The Skinny Blog.