• Median sales price reached a record $380,000 despite declining sales
• June inventory up 9.8 percent, a second consecutive year-over-year increase
• Softer demand led to longer days on market, up 5.0 percent to 21 days, on average

(July 18, 2022) – According to new data from Minneapolis Area REALTORS® and the Saint Paul Area Association of REALTORS®, Twin Cities home prices rose as sellers continued receiving strong offers despite slightly longer market times. Meanwhile, buyers signed 18.4 percent fewer purchase agreements than last year. While these signal a rebalancing marketplace, the persistent shortage of homes in the region should keep prices resilient.

Home Prices & Sales

The median home price hit a record $380,000 last month, an 8.6 percent increase from last June and a 23.4 percent increase since the beginning of the pandemic in June of 2020. For the last few years, historically low mortgage rates have offset the effect of rising prices on monthly payments. With rates recently moving from under 3.0 percent to 5.5 percent, the impact of rising prices has increased monthly payments. “While buyers should know that mortgage rates are still well below their long-term average, the increase in rates has had a real impact,” said Denise Mazone, President of Minneapolis Area REALTORS®. “Today’s buyers are more sensitive to that.” Indeed, the housing affordability index reached its lowest level since at least 2004. Buyers signed 5,544 purchase agreements last month, 18.4 percent fewer than last June. That’s the lowest June figure since 2014. But, the decline can be misleading because it’s compared to a uniquely strong market last year. Comparing to pre-pandemic levels, June closings were down just 3.6 percent from June 2019.

Inventory & Listings

A silver lining of moderating buyer activity is its effect on the inventory shortage throughout the region. The metro ended June with 8,020 homes for sale, 9.8 percent more than last June. Inventory gains have been rare, but with a mere 1.6 month’s of supply, buyers are thirsty for more choices. “It’s reassuring to see more homes on the market after a few years of under 2.0 months of supply,” according to Mark Mason, President of the Saint Paul Area Association of REALTORS®. “That said, the gain came mostly from fewer buyers and not more sellers, so we still need more supply and more building activity to balance out the market.” While the Twin Cities saw demand weaken, seller activity was more stable. New listings were down 6.7 percent from last year, with 7,901 homes coming on the market. But relative to June 2020, seller activity increased 4.4 percent.

Location & Property Type

Market activity varies by area, price point and property type. New home sales fell 12.1 percent while existing home sales were down 15.1 percent. Single family sales fell 13.8 percent, condo sales declined 24.5 percent and townhome sales were down 15.1 percent. Sales in Minneapolis decreased 21.7 percent while Saint Paul sales fell 15.8 percent. Cities like Rogers, Minnetrista, and Waconia saw the largest sales gains while New Richmond, Apple Valley, and Farmington had lower demand than last year.

June 2022 Housing Takeaways (compared to a year ago)

• Sellers listed 7,901 properties on the market, a 6.7 percent decrease from last June
• Buyers signed 5,544 purchase agreements, down 18.4 percent (6,422 closed sales, down 15.4 percent)
• Inventory levels grew 9.8 percent to 8,020 units
• Month’s Supply of Inventory rose 23.1 percent to 1.6 months (4-6 months is balanced)
• The Median Sales Price rose 8.6 percent to $380,000
• Days on Market rose 5.0 percent to 21 days, on average (median of 8 days, up 14.3 percent)
• Changes in Sales activity varied by market segment
  • Single family sales decreased 13.8 percent; Condo sales were down 24.5 percent & townhouse sales fell 15.1 percent
  • Traditional sales declined 15.2 percent; foreclosure sales rose 39.1 percent; short sales were up 100.0 percent (from 4 to 8)
  • Previously owned sales decreased 15.1 percent; new construction sales decreased 12.1 percent

From The Skinny Blog.

• There were 6,766 homes on the market at the end of May, 5.3 percent more than May 2021
• Median Sales Price reached a record $375,000, up 9.0 percent from last May
• Pending Sales were down 11.8 percent from last year’s May peak

(June 16, 2022) – According to new data from Minneapolis Area REALTORS® and the Saint Paul Area Association of REALTORS®, the Twin Cities metro area ended the month of May with 6,797 homes, 5.3 percent more homes than last May. This is the first year-over-year inventory increase since March of 2020.

Home Prices & Inventory

Inventory growth in the Twin Cities real estate market has been rare over the last 13 years. Despite record sales in 2021, home buyers were met with fewer listings from which to choose. Since the Great Recession, there have only been three periods with multiple consecutive months of year-over-year supply growth. If continued, the 5.3 percent inventory growth in May could hint at a new trend. Meanwhile the median home price rose 9.0 percent to $375,000. While this does amount to a record high, it’s likely June and July will exceed that level. The housing affordability index reacted to higher prices and rates with a reading of 94, meaning the median income was 94.0 percent of the necessary income needed to qualify for the median priced home under current interest rates. Given more listings and fewer sales, a loosening in inventory could cap price gains, but that takes time to play out and prices are unlikely to soften in the short term. Meanwhile, the metro sits at 1.3 month’s supply of inventory, 18.2 percent more than the year prior. A balanced market has four to six months’ supply. “There’s a sense out there that things are rebalancing somewhat,” said Denise Mazone, President of Minneapolis Area REALTORS®. “But it’s important to remember that we have a long way to go before we’re in oversupply territory so prices should remain firm for now.”

Listings & Sales

The Twin Cities saw increased seller activity in May for the first time this year—a possible indication of a rebalancing market. New Listings rose 3.2 percent to 7,930 homes last month. Growth in new listings is a contributor to higher inventory levels as is the partly rate-driven decline in buyer activity. Pending sales fell 11.8 percent in May as buyers signed purchase agreements on 6,076 homes. Declining year-over-year demand has been a theme all year since we’ve been comparing to the extremely strong 2021 market. Compared to 2020, pending sales were up 4.8 percent. “We may not have the same frenzy as last year, but REALTORS® are still busy compared to pre-pandemic levels,” according to Mark Mason, President of the Saint Paul Area Association of REALTORS®. “Listings are still selling quickly, even with record prices and higher rates.” Half of all homes went under contract in under 7 days, which is even with the year prior. The good news for sellers is that—despite a cooling in demand—buyers offered 4.1 percent over list price on average, a small increase compared to last May.

Location & Property Type

Market activity varies by area, price point and property type. New home sales rose 6.7 percent while existing home sales were down 3.2 percent. Single family sales fell 4.1 percent, condo sales declined 3.8 percent and townhome sales were up 4.0 percent. Sales in Minneapolis decreased 7.0 percent while Saint Paul sales fell 3.5 percent. Cities like Vadnais Heights, Buffalo, and Champlin saw the largest sales gains while Ramsey, St. Michael, and Andover had lower demand than last year.

May 2022 Housing Takeaways (compared to a year ago)

• Sellers listed 7,930 properties on the market, a 3.2 percent increase from last May
• Buyers signed 6,076 purchase agreements, down 11.8 percent (5,446 closed sales, down 3.8 percent)
• Inventory levels grew 5.3 percent to 6,797 units
• Month’s Supply of Inventory rose 18.2 percent to 1.3 months (4-6 months is balanced)
• The Median Sales Price rose 9.0 percent to $375,000
• Days on Market fell 4.2 percent to 23 days, on average (median of 7 days, even with May 2021)
• Changes in Sales activity varied by market segment
  • Single family sales decreased 4.1 percent; Condo sales were down 3.8 percent & townhouse sales rose 4.0 percent
  • Traditional sales declined 2.7 percent; foreclosure sales fell 7.9 percent; short sales were up 100.0 percent (from 3 to 6)
  • Previously owned sales decreased 3.2 percent; new construction sales increased 6.7 percent

  
  From The Skinny Blog.