Listings up but sales down as buyers eye lower mortgage rates ahead

• Signed purchase agreements fell 4.2%; new listings up 7.2%
• The median sales price increased 2.7% to $385,000
• Market times rose 24.1% to 36 days; inventory up 11.4% to 9,398

(August 15, 2024) – According to new data from Minneapolis Area REALTORS® and the Saint Paul Area Association of REALTORS®, seller activity rose in July compared to last year while buyers pulled back. Inventory and prices were higher.

Sellers, Buyers and Housing Supply
While the first quarter of 2024 was off to a good start, the second quarter was weaker. Homes were selling faster in January, February and March than last year. But homes were selling slower than a year ago in May, June and July. Sellers got stronger offers in January, February and March compared to last year. But then sellers accepted a smaller share of their list price in April, May, June and July. So, it’s important to put the current month’s activity for July in context. January and February of this year, for example, were abnormally warm, which allowed for more showings and sales. April, May and June all had higher than expected mortgage rates, which held back sales activity. Because of those variable factors and how they cloud apples-to-apples comparisons, it’s useful to assess market health based on a variety of time frames. To demonstrate, pending sales were down 4.2% for July but are up about 1.0% for the year. Market times were up 24.1% in July but are only up 4.8% so far this year.

Overall, seller activity has been rising modestly while buyer activity is relatively flat to up slightly for the year so far. That has also meant more inventory—also known as active listings or the number of homes for sale. But the inventory isn’t necessarily in the price buckets today’s home buyers want and need, and they may not be in the preferred market segment or location. Plus, it’s still squarely a seller’s market although not for all areas, segments or price points. Higher interest rates have stuck around, though there’s good evidence that will change. Most buyers (especially first-time) would agree that change can’t come soon enough as they’re still feeling the triple punch of rising prices, low inventory and higher mortgage rates. Plus, they lack the equity to use as a downpayment on the next home. There is a good amount of pent-up demand waiting for the affordability picture to improve. One concern is that as rates ease, demand will be unleashed, and buyers could find themselves in multiple-offer situations writing contracts for well over list price. That higher principle can negate any savings on monthly payments from lower mortgage rates. “It may very well be worth it to stomach a temporarily higher rate for a less competitive environment,” said Jamar Hardy, President of Minneapolis Area REALTORS®. “Buyers are eager for more supply, but we’re still finding consumers to be cautious and selective.”

Prices, Market Times and Negotiations
Each area and market segment are unique. The market-wide median sales price rose to $385,000, but new single-family homes tended to fetch $540,000 while existing condos were nearer to $215,000. Overall, sellers accepted offers at 99.5% of their list price on average. That said, listings priced between $300,000-$500,000 got offers at 100.1% of list price while homes over $1M were 97.9%. Once again, all listings tended to sell in about 36 days, but new homes took closer to 76 days to sell while existing homes got offers within 31 days. Single family homes are selling after 32 days, but condos are taking 63 days. “A slight slowdown in the second quarter activity is likely to change for the better as interest rates continue to ease,” said Amy Peterson, President of the Saint Paul Area Association of REALTORS®. “But those lower rates will mean more buyers in the pipeline who’ve felt priced out of the market previously will be home shopping again. Lots of people have that same idea so offer strategies could change with a more competitive market.”

Location & Property Type
As noted, housing markets are not homogeneous. New home sales outperformed existing home sales while condo sales fell much more than single family. Sales over $500,000 performed better than sales under $500,000, as higher-end buyers are less rate-sensitive. Cities such as Columbus, Hudson, Corcoran and Hanover saw among the largest sales gains while Mounds View, Orono, Medina and Victoria all had notably weaker demand. For cities with at least five sales, the highest priced areas were Wayzata, Independence, Orono and North Oaks while the most affordable areas were Lauderdale, North St. Paul, St. Paul Park and Oakdale.

From The Skinny Blog.

Metro home prices hit record high despite higher rates and more inventory

• Signed purchase agreements fell 10.8%; new listings down 5.8%
• The median sales price increased 1.8% to $390,000
• Market times rose 9.7% to 34 days; inventory up 10.6% to 8,905

(Jul. 16, 2024) – According to new data from Minneapolis Area REALTORS® and the Saint Paul Area Association of REALTORS®, listings rose slightly compared to last year while sales softened. Inventory levels and prices were up.

Sellers, Buyers and Housing Supply
It’s official. Half of 2024 is in the books. That makes it a good time to zoom out and check on some year-to-date figures. So far this year, there have been 10.6% more new listings and 1.8% more pending sales metro-wide compared to the same period last year. That means seller activity has risen more than five times the pace of buyer activity on a year-to-date basis. Put another way, there was more supply coming online relative to demand—a trend confirmed by eight consecutive months of inventory growth. For June, the number of homes for sale was up 10.6% to 8,905 active listings. That’s the number of listings on which buyers can write offers. While buyers may be feeling less pressure with 850 additional homes to choose from, there are still only 2.4 months of supply, indicating a seller’s market; a balanced market is 4-6 months of inventory.

While this year has seen growth in both listings and sales compared to 2023, there seems to have been a cool-down in activity in May and June as signed purchase agreements dipped. At around 7.0%, mortgage rates in May and June of this year hovered higher than last year. And buyers are still feeling the triple punch of rising prices, low inventory and higher interest rates. There is a good amount of pent-up buyer and seller activity waiting in the wings for an improved affordability picture.

But all situations are unique. For example, move-up buyers with built up equity from their first home can roll that equity into their next property, while most first-time buyers don’t have that luxury. Additionally, market inventory and high interest rates lead to a decrease in overall activity, especially when it comes to more affordable homes as those buyers are the most rate sensitive.

Prices, Market Times and Negotiations
Listings in some areas are still getting multiple offers and selling for over list price. In fact, overall, sellers accepted offers at 100.1% of their list price on average. While perhaps surprisingly strong, that was down from last year. And those offers came in after an average of 34 days on market, which was up from last year. Single family homes specifically are selling after 31 days but condos are taking 56 days. “This is still a somewhat fragmented market where activity truly varies from price point to price point and area to area,” said Jamar Hardy, President of Minneapolis Area REALTORS®. “While we’re encouraged by more supply, the lack of affordability caused by higher mortgage rates and rising prices are still significant hurdles.”

The median home price was up 1.8% to $390,000. That was the smallest gain since December. The single-family median price rose to $425,000, while condos fell to just under $200,000 and townhomes dipped to $310,000. New home prices are just over $500,000 while existing home prices are $380,000. Low inventory and the mix of product selling—i.e. more luxury and new construction—are partly what’s keeping prices so firm. “We are observing that the limited inventory is still affecting prices and activity for more affordable properties,” said Amy Peterson, President of the Saint Paul Area Association of REALTORS®. “Partnering with a qualified and experienced professional will help consumers navigate the intricacies of this market.”

Location & Property Type
Market activity always varies by area, price point and property type. New home sales outperformed existing home sales while condo sales fell by over twice as much as single family. Sales over $500,000 performed better than sales under $500,000. Cities such as Mahtomedi, Hudson and North Oaks saw among the largest sales gains while Delano, Annandale and Elko New Market all had notably weaker demand. For cities with at least five sales, the highest priced areas were Deephaven, Shorewood, Tonka Bay and North Oaks while the most affordable areas were Hopkins, St. Paul Park and Spring Lake Park.

May 2024 Housing Takeaways (compared to a year ago)

• Sellers listed 6,358 properties on the market, a 5.8% decrease from last June
• Buyers signed 4,469 purchase agreements, down 10.8% (4,540 closed sales, down 16.3%)
• Inventory levels increased 10.6% to 8,905 units
• Month’s Supply of Inventory rose 14.3% to 2.4 months (4-6 months is balanced)
• The Median Sales Price was up 1.8% to $390,000
• Days on Market rose 9.7% to 34 days, on average (median of 15 days, up 25.0%)
• Changes in Pending Sales activity varied by market segment and price point
  • Single family sales fell 8.5%; condo sales were down 21.1%; townhouse sales decreased 17.2%
  • Traditional sales were down 10.5%; foreclosure sales declined 34.2% to 25; short sales rose 25.0% to 5
  • Previously owned sales decreased 11.6%; new construction sales were up 0.2%
  • Sales under $500,000 declined 13.2%; sales over $500,000 decreased 2.5%

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From The Skinny Blog.