New Listings and Pending Sales
New Listings and Pending Sales
Sales flatten and prices remain higher, meanwhile new listings rise and rates ease
- The median sales price increased 2.0% to $362,000
- Signed purchase agreements fell 1.5%; new listings up 5.3%
- Market times flat at 40 days; months’ supply up 10.5% to 2.1 months
(Dec. 15, 2023) – According to new data from Minneapolis Area REALTORS® and the Saint Paul Area Association of REALTORS®, metro-wide home prices rose slightly in November. Sales activity was flat as mortgage rates softened slightly and new listings were up 5.3%.
Sellers, Buyers and Housing Supply
Rates have eased from over 8.0% in mid-October to around 7.0% by the end of November. While still elevated relative to the last 20 years, that figure is below its 50-year average. In addition to a low baseline comparison, that decline has helped the number of signed purchase agreements stabilize in November. And because sellers weren’t feeling quite as stuck in their homes, the dip in rates helped boost seller activity as some felt more confident about listing their homes.
Slightly lower rates could mean more buyers will qualify and write offers, and that fewer sellers will feel “locked in” to their mortgage rates. While that could mean more listing activity, it’s likely to be met with demand that’s been pent up for a while in the current affordability environment. Come spring market of 2024, that balance between supply and demand may offer key insights into how the year could play out.
Buyers are still feeling the triple punch of low inventory, rising prices and still relatively high mortgage rates. Comparing pending sales to closed sales can offer unique insights into demand trends. Pending sales were down just 1.5% from last November and are a better leading indicator than closings. Closed sales—reflecting contracts mostly signed in September and October when rates were higher—were down 7.1%. On the supply side, inventory levels across the Twin Cities fell 5.1% compared to last November. While buyers are still finding limited options in their searches, deals are still occurring with some persistence and flexibility. In addition, the lack of existing inventory has benefited the new home market.
More buyers are choosing to deploy cash instead of paying today’s interest rates. Cash sales so far this year are at their highest level since 2014. Overall, since both supply and demand levels are lower, the relative balance hasn’t changed as much as expected. “The recent dip in rates has definitely spurred some buyer interest,” said Jerry Moscowitz, President of Minneapolis Area REALTORS®. “Buyers choosing to wait until spring should expect heightened competition.”
Prices, Market Times and Negotiations
Though seemingly counter-intuitive, home prices continued their ascent, up a modest 2.0% from last November. Prices are rising for several reasons.
- Supply is short as homeowners with favorable rates remain in their homes.
- Today’s buyers tend to be better off financially and often use cash for higher-priced homes as higher rates have hindered the mid-end buyer, meaning activity is skewing toward the higher end of the market.
- Luxury activity continues to outperform along with new construction activity that also skews toward the upper end.
Negotiations held firm but have balanced out recently. Sellers accepted 97.4% of their asking price, which was up from 2022 but down from 2021. Half the homes went under contract in under 23 days compared to 25 days last year. That figure was once again improved from 2022 but softer compared to 2021.
Those two indicators reflect the relatively strong position in which sellers still find themselves, assuming they’re willing to sell. For November, the median home price rose 2.0% to $362,000. The year as a whole will likely show 1.0 to 2.0% price growth. “Buyers seem more sensitive to changes in rates than to the rate itself,” said Brianne Lawrence, President of the Saint Paul Area Association of REALTORS®. “While even a full point decrease in the rate hasn’t magically solved our affordability issues, it does lower monthly payments slightly.”
Affordability, Rates and Payments
Even as the Federal Reserve paused their rate hikes, the impact of mortgage rates on monthly payments is significant. Mortgage rates hit a 23-year high in October but retreated nearly a full point since. The Housing Affordability Index reached its lowest level since at least 2004. Given rates, incomes and prices at the time, affordability was better in 2006 than it is today. Using some assumptions around taxes and insurance, the local monthly payment on the median priced home stands at $2,650 so far this year compared to $1,600 in 2020.
Location & Property Type
Market activity always varies by area, price point and property type. New home sales rose while existing home sales fell. Condo sales rose more than single family and townhome units. Purchase agreements were down 13.0% in St. Paul but up 14.5% in Minneapolis. Cities farther out such as Cologne, Princeton, New Prague and North Oaks saw among the largest sales gains while Monticello, Isanti and Shorewood all had weaker demand.
November 2023 Housing Takeaways (compared to a year ago)
- Sellers listed 3,657 properties on the market, a 5.3% increase from last November
- Buyers signed 2,807 purchase agreements, down 1.5% (3,261 closed sales, down 7.1%)
- Inventory levels shrank 5.1% to 7,819 units
- Month’s Supply of Inventory rose 10.5% to 2.1 months (4-6 months is balanced)
- The Median Sales Price was up 2.0 percent to $362,000
- Days on Market was flat at 40 days, on average (median of 23 days, down 8.0%)
- Changes in Pending Sales activity varied by market segment
- Single family sales decreased 1.8%; condo sales were up 12.7%; townhouse sales fell 4.9%
- Traditional sales declined 2.1%; foreclosure sales rose 71.4% to 36; short sales fell 25.0% to 6
- Previously owned sales were down 3.7%; new construction sales increased 22.3%
- Sales under $500,000 decreased 5.3%; sales over $500,000 were up 16.7%
New Listings and Pending Sales
New Listings and Pending Sales
New Listings and Pending Sales
Twin Cities Housing Market Starts off the Year Slowly, For Now
- Metro-wide Inventory is down 24.2 percent since the start of 2021
- Month’s Supply of Inventory (absorption rate) is at a record low, ~ 3 weeks of supply
- Median Sales Price rose 10.4 percent to $332,250
(February 15, 2022) – According to new data from Minneapolis Area REALTORS® and the Saint Paul Area Association of REALTORS®, inventory levels in the Twin Cities metropolitan area have reached a decades-long low of 4,221 homes at the end of January. At the current rate of demand, this inventory would last little more than three weeks without the addition of new listings. The market would require six months of supply in order to be considered balanced.
LISTINGS & SALES
Real estate in the Twin Cities saw a peak of buyer activity throughout 2021, but only now are we able to see the extent of that increased demand. Year over year comparisons of pending sales indicate a noticeable drop of 11.7 percent from last January, but a more historical perspective shows that the 3,170 purchase agreements signed last month are comparable to January of 2019 and 2018. Closed sales show a similar picture, 2022 is not starting off with the same fervor as 2021. The same goes for sellers, resulting in an 11.5 percent drop in supply since last January.
“The year began about as expected, with both sales and listings unable to match their year-ago levels,” said Denise Mazone, President of Minneapolis Area REALTORS®. “But don’t get the wrong idea, the market is expected to remain pretty hot this year as demand continues to outpace supply but also as buyers hope to get ahead of rising rates.”
INVENTORY
While the supply of new listings has historically been a concern for over a decade, the public could usually count on consistent year-over-year activity from sellers until 2020. A sharp fall in supply two summers ago followed by a rebound in 2021 led to variations in seller activity unseen since 2015. Last month sellers listed 3,605 properties on the market, our lowest level of seller activity since 2005.
“It’s important that market participants understand what less than 1.0 month of supply means,” according to Mark Mason, President of the Saint Paul Area Association of REALTORS®. “This means well-priced and attractive listings will sell quickly and often with multiple offers in play. Buyers should be patient but prepared to write strong, non-contingent offers while sellers should be ready to move quickly.”
HOME PRICES
The stark contrast between lackluster seller activity and the remaining rush of demand from buyers leaves the Twin Cities with a housing market where half of its listings last no longer than 21 days, down 4.5 percent from a year prior. This strong seller’s market has driven up the price of listings, now at $332,250 which is the highest January median sales price on record. These market dynamics, if left unchanged, show signs of high market prices and stiff competition for buyers as the weather warms.
LOCATION & PROPERTY TYPE
Market activity varies by area, price point and property type. The condominium market has seen a significant increase in the past year, yet January was the first significant drop in the number of condo sales, down 11.5 percent. New construction has hit a downward trend since last summer and this trend continues with a 6.8 percent decrease in sales. Between Minneapolis and St. Paul, the state capitol city fared better for the first month of the year, seeing a 2.3 percent increase in closed sales while Minneapolis experienced a 16.1 percent drop in sales. The suburban cities that showed the most sales growth in January were Savage (100 percent), Chanhassen (50.0 percent), and Stillwater (45.5 percent) while those that lost the most sales from last year were West Bloomington (- 43.9 percent), Lakeville (- 43.0 percent), and St. Louis Park (- 41.7 percent).
January 2022 by the numbers compared to a year ago
-
- Sellers listed 3,605 properties on the market, an 11.5 percent decrease from last January
- Buyers signed 3,170 purchase agreements, down 11.7 percent (3,020 closed sales, down 10.4 percent)
- Inventory levels fell 24.2 percent to 4,221 units at month-end
- Months Supply of Inventory was down 20.0 percent to 0.8 months (4-6 months is balanced)
- The Median Sales Price rose 10.4 percent to $332,250
- Days on Market fell 2.4 percent to 41 days, on average (median of 21 days, down 4.5 percent from January 2021)
- Changes in Sales activity varied by market segment
- Single family sales fell 11.0 percent; Condo sales declined 11.5 percent & townhouse sales were down 4.5 percent
- Traditional sales decreased 9.3 percent; foreclosure sales tumbled 32.4 percent; short sales fell 69.2 percent
- Previously owned sales were 9.9 percent lower; new construction sales were 6.8 percent lower
January 2022 housing charts