Sellers slower, buyers busier, inventory increasing

• Signed purchase agreements statewide were up 8.5%, and new listings were down 0.9%
• The statewide median sales price increased 4.4% to $340,000
• Market times across the state rose 12.5% to 45 days, and inventory was up 3.9% to 14,398

(Dec. 17, 2024) – According to new residential market data from the Minnesota state and Twin Cities metro REALTOR® associations, sales, prices and inventory all rose in November while seller activity was down slightly.

Sellers, Buyers and Housing Supply

With 11 months in the books so far, we’re getting a clear picture of how the 2024 housing market performed relative to past years. For November, pending sales statewide rose for a second month in a row while new listings showed their first decline in three months. Five out of 14 regions across the state saw year-over-year gains in new listings while 8 of 14 regions saw year-over-year increases in pending sales. All 14 regions saw rising home prices compared to last November. Twelve of 14 regions showed inventory growth from last year. The biggest gain in new listings was in the Alexandria region; the largest increase in pending sales was in the Detroit Lakes region; the largest jump in home prices was in the Grand Rapids area. St. Cloud was the tightest and most undersupplied market. The Twin Cities metro is the highest priced area and accounts for 66.3% of statewide sales activity and 60.2% of statewide inventory.

Buyers remain rate-sensitive, though perhaps less than in the recent past. In November, the 30-year mortgage rate averaged its highest level since July of this year. Despite that, statewide pending sales rose 8.5%, their second largest increase in eight months. This could signify a growing acceptance of the current rate environment. There’s also a high degree of pent-up demand to make a move. But listings declined 0.9% in November, which was essentially flat. The Federal Reserve is likely to cut its benchmark rate this month, but the Fed could be slower to cut rates in 2025. That means mortgage rates are still likely to come down, but at a slower pace than anticipated. While that should help with affordability, there are concerns about whether rising insurance rates and property taxes could negate any progress. It’s still worth noting that wage growth has been exceeding the rate of inflation. Slower growth in home prices combined with strong wage growth could also help improve affordability without home prices falling.

“We’re at a time of year when buyers can take advantage of a slower pace and a calmer, less competitive environment,” said Geri Theis, President of Minnesota Realtors®. “My buyers in beautiful southeastern Minnesota are enjoying the fact that we have the most inventory since 2019.”

On the active supply side, inventory levels rose 3.9% compared to last November. That indeed puts the current inventory figure at its highest level for any November since 2019—yet still 26.7% below that level. While buyers can take some comfort in that, it’s still important to recognize the ongoing supply shortage, despite recent inventory growth across the state and metro. The residential marketplace continues to rebalance and normalize. Every month this year has had a higher month’s supply of inventory compared to 2023. But the triple punch of higher prices, higher interest rates and low supply is still hindering would-be buyers.

Prices, Market Times and Negotiations

Every location and market segment is unique. Some listings fetch multiple offers and close for over list price while other sellers are accepting offers below asking price. Overall, sellers accepted 96.7% of their original list price statewide and 97.6% in the metro—both more or less flat from last year. And those offers were accepted after an average of 45 days on market statewide and 50 days in the metro—both figures up from a year ago.

“I see buyers showing more interest yet also being more cautious,” said Jamar Hardy, President of Minneapolis Area REALTORS®. “And part of that is that they’re slowly but surely seeing more options hit the marketplace. Minneapolis and the surrounding suburbs in particular offer a wide array of housing options across the entire price spectrum.”

The statewide median home price was up 4.4% to $340,000 while the Twin Cities price was up 3.4% to $375,000. Aside from more choices for buyers, improved housing supply should also translate to less upward price pressure and thus more modest price growth. All real estate markets are local. A few hours north of Minneapolis, the median home price in Grand Rapids rose nearly 30.0% but stood at $270,000. Just 40 minutes east of there—in the heart of the Iron Range—the median price was $160,000 in the Hibbing and Virginia area. And homes two hours west of Minneapolis in the Willmar area are selling for around $215,000. In Rochester, just over an hour southeast of the Twin Cities, home prices are closer to $285,000. These November figures are always lower than their summer highs but are all higher than a year ago.

“Many buyers and sellers are feeling renewed optimism about making a move and are returning to the market,” said Amy Peterson, President of the Saint Paul Area Association of REALTORS®. “Realtors are engaging in meaningful conversations about the full scope of homeownership costs, and buyers are growing more comfortable with current interest rates. By understanding the unique goals and options of each buyer and seller, we can provide thoughtful guidance and tailor solutions to help them navigate today’s challenging market conditions.”

Locational Differences | Minnesota statewide

Market activity always varies by area, price point and property type. Regions such as Alexandria, Mankato and Brainerd saw the largest gains in seller activity. St. Cloud, Willmar and Rochester had the largest gains in pending sales. Homes sold the fastest in the Duluth/North Shore region along with St. Cloud and Rochester. Prices were highest in the Twin Cities followed by Detroit Lakes and Brainerd. The most affordable regions of the state were Hibbing/Virginia and Willmar. Every region is undersupplied except Bemidji, which is relatively well balanced.

Locational Differences | Twin Cities Metro

For cities with at least five sales, Maple Lake, Hanover and Chisago had the largest sales gains. The highest priced areas were North Oaks, Medina and Orono while the most affordable areas were Little Canada, Pine City and Lonsdale. Homes sold the quickest in Ham Lake, Lonsdale and Spring Lake Park but took the longest to sell in Columbus, Hanover and North Oaks. The most undersupplied markets were St. Bonifacius, Richfield and North St. Paul while the most oversupplied markets were Hanover, Cologne and Scandia.

From The Skinny Blog.

SIZABLE GAINS IN LISTINGS AND SALES DESPITE RATE ENVIRONMENT

• Signed purchase agreements were up 10.4% statewide, and new listings were up 9.1%
• The median sales price increased 5.3% to $347,500
• Market times rose 10.5% to 42 days, and inventory was up 8.2% to 16,281

(Nov. 14, 2024) – According to new data from the Minnesota state and Twin Cities metro REALTOR® Associations, listings, sales, prices and inventory all rose in October.

Sellers, Buyers and Housing Supply

Mortgage rates hovered between 6.0–7.0% all month long, but buyers seem to be adjusting to the current rate environment as pending sales rose a strong 10.4% statewide and 14.3% in the metro. The average 30-year mortgage rate was 6.18% in September and 6.43% in October. With the exception of September, rates haven’t been that low since May of 2023. The pent-up activity is on the supply side, too. Most sellers are also buyers, and those who chose to delay their move are getting restless. While they’ll be met with more inventory, they may not see the most ideal interest rate. Still, new listings were up 9.1% statewide and 8.7% in the metro compared to last October.

Despite recent gains, supply levels remain low due to a lack of new home construction. Existing sellers who would ordinarily move up the housing ladder and free up their first-time home feel “locked in” to their favorable mortgage rates. Those rates are often between 3.0–4.0% or lower compared to nearly 7.0% today. The Federal Housing Finance Agency (FHFA) has found that about 70% of all outstanding mortgages are financed below 4.0%. There are signs of change, but housing demand has fallen due to the affordability crisis. The persistent housing shortage kept home prices rising, just as the Federal Reserve hiked interest rates to combat inflation. Prospective home buyers are still feeling the triple punch of higher prices, higher mortgage rates, and limited inventory. While home prices are still rising, wage growth has been exceeding the rate of inflation. In fact, the U.S. Bureau of Labor Statistics reports that wages are rising at 4.6% while inflation is rising at 2.4%.

“We see buyers adjusting to today’s mortgage rates, but experienced Realtors know there are many ways to get deals done,” said Geri Theis, President of Minnesota Realtors®. “Having a strong Realtor negotiating on your behalf, directing you to down payment resources and offering suggestions on timelines and contingencies will help you stand out against your competition and ultimately help you close the deal.”

Prices, Market Times and Negotiations

Every area and market segment is unique. Some listings are getting multiple offers and closing for over list price. But overall, sellers accepted offers at 97.1% of list price statewide and 97.8% in the metro—both down from last year. And those offers were accepted after an average of 42 days on market statewide and 45 days in the metro—both figures up from a year ago. “We’re seeing different activity in different price points, areas and segments such as condos or new construction,” said Jamar Hardy, President of Minneapolis Area REALTORS®. “What’s impacting $1M+ buyers isn’t necessarily on the mind of a $300,000 buyer, and condos and new construction are better supplied and more accessible than the existing single-family market, for example.”

The state median home price was up 5.3% to $347,500, and the metro median price was up 4.1% to $380,000. A slowdown in price growth would give incomes a chance to catch up, helping address affordability concerns. And additional inventory will mean less upward price pressure from a persistent supply shortage. It would also allow buyers to have more options from which to choose. “Sales numbers confirm some of the renewed optimism I’m seeing in today’s housing market given better rates and more inventory,” said Amy Peterson, President of the Saint Paul Area Association of REALTORS®. “While many sellers and buyers feel now is the right time to make a move, it’s still important to consider their goals in taking that next step and negotiating offers.”

Locational Differences | Minnesota statewide

Market activity always varies by area, price point and property type. Regions such as Duluth and the North Shore and Hibbing/Virginia saw the largest gains in seller activity. Alexandria, St. Cloud and the Twin Cities had the largest gains in pending sales. Homes sold the fastest in the Duluth/North Shore region along with St. Cloud. Prices were highest in the metro followed by Detroit Lakes and Rochester. The most affordable regions of the state were Hibbing/Virginia and Willmar. Every region is undersupplied except Hibbing/Virginia, Detroit Lakes and Bemidji, which are relatively well balanced.

Locational Differences | Twin Cities Metro

For cities with at least five sales, Afton, Columbus and Arden Hills had the largest sales gains. The highest priced areas were Orono, Afton and North Oaks while the most affordable areas were South St. Paul, Brooklyn Center and Isanti. But the largest increases in sales price were in Afton, Orono and Hopkins. The most oversupplied markets were Clear Lake, Centerville and Cokato while the most undersupplied markets were Oak Park Heights, North St. Paul and Mound. Homes took the longest to sell in Mayer, Columbus and Centerville and sold the fastest in Norwood, Greenfield and New Brighton.

From The Skinny Blog.