Local Market Conditions & home prices

This just in from our state Realtor association:

Higher Interest Rates are slowing home sales.

Sales continued to soften in October even as listings rose slightly. Home prices increased modestly, further hindering overall affordability. Sellers listed 3.2% more homes than last year, marking the first year-over-year increase in new listings since May 2022.

Would-be sellers are reluctant to list due to the “lock-in effect” where homeowners are clinging to their attractive mortgage rates and monthly payments. Most sellers must turn around and become buyers, and buyers are feeling the triple pinch of low inventory, rising prices, and higher rates.

“After mortgage rates hit a 20-year high they’ve fortunately come down a bit, offering some reprieve to uneasy buyers,” said Emily Green, President of Minnesota Realtors®. “That said, every region is different but sellers who are willing to list might be pleasantly surprised.”

October Year-Over-Year Summary of Key Market Indicators:

Closed sales: 5,794 (down 7.1%)

Median sales price: $330,00 (up 3.1%)

Average sales price: $386,493 (up 3.0%)

New listings: 7,180 (up 3.2%)

Pending sales: 5,192 (down 3.7%)

Days on the market: 37 (up 2.8%)

Homes for sale: 13,997 (down 0.4%)

Supply and demand drive the housing market. The supply of houses remains very low but up from an all-time low, which was a one-month supply in May of 2022. There is almost a two-month supply of homes for sale in St. Paul and a two-month supply in the 7 county metro area. The low supply will continue to drive up prices even though interest rates are over 7%.

It seems like the months are flying by. Here we are in November looking at October home sales. Most of the activity that resulted in sales in October actually happened in August and September. Interest rates seem to have peaked last week. We will likely see the impact of higher rates in the December numbers.

There are a few more homes for sale right now than there were last month and pending home sales went down. Prices are pretty stable. It takes less than 30 days to sell a house and the market favors sellers.

Here are home sales by St. Paul neighborhood for October 2023. These are single-family homes including condos. When the average sales price is higher than the average listed price that indicates that prices are or were going up. I think the numbers will look different in November because we are seeing a lot of price reductions. Buyers can and should negotiate.

This just in from Minnesota Realtors which is the state association of Realtors.

September 2023 Year-Over-Year Summary of Key Market Indicators: 

• Closed sales: 6,383 (down 16.7%)
• Median sales price: $334,900 (up 3.0%)
• Average sales price: $389,658 (up 2.8%)
• New listings: 7,987 (down 5.5%)
• Pending sales: 5,535 (down 7.6%)
• Days on the market: 32 (down 3.0%)
• Homes for sale: 14,185 (down 2.9%)

Those prices keep rising due to a low supply and a high demand. Prices are not going up much but they are rising.

 

This Fall there is a two-month supply of houses on the market in the five-county metro area. With higher interest rates this may change but for now, the seller’s market isn’t losing its strength.

Homeowners with mortgages that have interest rates in the 1 to 3% range are likely to stay put for a while which means fewer houses on the market. At the same time, demand for houses remains high.