Home sales and new listings fell by double digits in the Twin Cities last month.
And with more buyers than sellers in parts of the metro, median home prices rose another 7% to $375,000, according to a monthly report from Minneapolis-area realtors.
“Aspiring home buyers still face competition and multiple offers, down slightly from the past two years,” said Mark Mason, president of the St. Paul Area Association of Realtors. “So even though the market has slightly rebalanced, it still favors sellers.”
Rising mortgage rates and record home prices have sidelined many buyers. This shift has left buyers and sellers adjusting and wondering how to time their moves.
“It was both nerve-wracking and intriguing as we waited to see what was to come,” said Stephanie Hanson of Rosemount, who along with her husband Ryan put their home up for sale.
In July, there was a 23% drop in pending home sales and a 17% drop in new listings. That left shoppers with just 8,694 listings to choose from at the end of the month, up slightly from this time last year.
At the current rate of sales, there were only enough homes for sale to last 1.7 months, although this is a slight increase from last year.
Sellers are still getting great offers, but not as many as last year. On average, sellers got 101.5% of their asking price, up from 104% a year ago. And the rate at which homes are selling is only slowing modestly.
Homes sold in July sold in just 22 days on average, three days less than last year.
The Hansons bought their split-level home in Rosemount just 21⁄2 years ago and were forced to sell it due to a job opportunity in South Dakota. Stephanie Hanson said the changing market made them nervous about having to sell it so quickly after buying it.
A market analysis showed the Hansons’ home, which was built in 1987, was likely to fetch at least $380,000 even though they paid just $290,000 in March 2020.
Their agent, Cheryllyne Vaz, said she was confident as long as the Hansons got the house in the best shape possible. She promoted the house on social media, made a video and distributed hundreds of postcards and flyers.
“It’s critical that a home be staged perfectly because a seller only has one chance to catch a buyer’s eye,” Vaz said.
She said she held five open days but received very few visitors. But after scheduling just four viewings and only a few days on the market, they received an offer from a buyer who was willing to pay more than the asking price and forgo an independent home inspection.
“It’s an interesting time,” Hanson said. “Everyone is a bit hesitant about what to do if the market keeps changing.”
Being a buyer was no less stressful. They weren’t sure, she said, how aggressive to make when making an offer on a home in Brookings, SD In the end, they closed on a home after offering the seller a bit less than he asked for.
“It’s always competitive,” she said of Brookings, a college town of just 25,000 people. “We felt that as a buyer we should be ready to make an offer at any time.”
Buyers and sellers are still adjusting to the impact of mortgage rates which have nearly doubled since the start of the year. Last Thursday, Freddie Mac said the 30-year fixed-rate mortgage averaged 5.22%, down from 4.99% the previous week.
National home sales fell in July for the fifth consecutive month, raising the likelihood that home prices will continue to rise.
Redfin, an online real estate brokerage, said last week that new listings of homes for sale nationwide fell 12% and pending home sales fell 16%.
Despite the drop in new listings, the overall national housing supply continues to grow, with the total number of homes for sale across the country increasing by 4%.
In the Twin Cities, this change happened slowly. Home buying has slowed for 11 of the past 12 months, according to MAR. The biggest declines in sales occurred among the cheapest homes.
The biggest increase in sales was in the top bracket. Sales of properties over $500,000 increased by nearly 10%. That includes a downtown Minneapolis penthouse condo that closed in late July at a full list price of $6.99 million. It was on the market barely 22 days.