• 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.