Minnesota Realtors® Announce “Mid-year Market Update”

By Erica Forman posted 07-26-2021 08:53

  

Trends revealed in first six months of statewide data

MINNEAPOLIS – July 26, 2021 – The housing market was defined by three things during the first half of 2021 according to Minnesota Realtors (MNR). The group representing 22,000 Realtors across Minnesota is releasing data today from the first half of the year. The three overarching themes across the state are a lack of inventory, booming closed sales and rising prices. The information is outlined below, with a statewide look and a breakdown by region.

“It’s still a seller’s market with only about a month’s worth of homes available for buyers across the state, and very little selection,” said T.J. Simon, President of MNR. “Sellers continue to get multiple offers that are all over the asking price and that will remain the case until the market opens up.”

Statewide

In January, closed sales were up 16.2% as buyers snatched up scarce inventory. Only 7,860 homes were for sale in the state at the time, which is a 48.3% decline from January 2020. The median sales price rose 10.9% over January 2020 to $272,000, and the average sales price hit $310,785, up 8.4%. Even a traditionally slow month like February saw a healthy increase in closed sales, up 5.8% from 2020. And in March, closed sales were up 3.1%, despite a 10.9% drop in new listings.

In April, the second quarter began with surging numbers on all fronts:

  • Closed sales: +10.9% to 7,060
  • Median sales price: +10.9% to $305,000
  • Average sales price: +12.8% to $345,412
  • New listings: +18.2% to 10,333

Naturally, the only declines were supply—down 51% to 8,519, and days on the market, which shrank 25% to just 36 days. By May, closed sales were up 14.5% while new listings inched an anemic 0.2% above last year. Multiple offers were the new normal, and cash offers were on the rise. All this competition pushed the median price to $310,000, up 15.7% from 2020, an all-time high for sales price and a high-water mark for the year over year percentage increase. On average, sellers were getting 4.5% above their asking price. In June, with homes for sale down 40.8% from the year before, the median price soared to a historic high of $325,000, which is 18.9% above June 2020.

“With a historically low supply of homes—at 1.1 months’ worth—it seemed surprising that more sellers weren’t entering such a favorable market,” said Simon. “The catch, of course, is that sellers inevitably become buyers. That’s why so many potential sellers are staying in their current homes until the market is more balanced.”

Duluth and the Arrowhead

Along the shores of Lake Superior and the Arrowhead region, buyers were out in force during the first six months of 2021, but there simply weren’t enough homes for sale. Still, closed sales continued to perform above 2020 levels.

The year kicked off with a 35.3% spike in January but was tempered by a 32.9% drop in new listings. This dragged down pending sales 22.9% compared to last year. Overall, inventory shrank 58.1% over last year to just 1.8 months.

Scarce housing stock combined with a polar vortex flattened closed sales in February. Just 205 transactions were closed, exactly matching the numbers for 2020. As the weather warmed in March, closed sales ticked up 3.0% as new listings inched up 0.2%. By spring, closed sales were gaining momentum, rising 14.2% over last year.

The trend continued in May with closed sales popping 28.6% and new listings rising 7.1%. Pending sales dipped slightly, down 2.7%, reflecting the lack of inventory. As competition heated up, homes were getting a little over 100% of the asking price, and sold about 50 days, down 33.8%. The median sales price hit $199,950, up 8.8% over May 2020.

In June, closed sales were up 8.0%, even as inventory shrank 46.7% to just over two months’ supply. New listings ticked up 5.7% but pending sales dropped 21.3%, possibly reflecting buyers’ inability to find the right homes at affordable prices.

St. Cloud and Central Region

The big story in St. Cloud and the Central region mirrored the statewide data, with record high demand, low inventory and rising prices.

The selling season kicked off early with closed sales up by nearly 25% over last year. Pending sales were robust, too—up more than 16% this year. But in a sign of things to come, new listings shrank – and as buyers scrambled for properties, supply thinned to barely a month. Consequently, there was a frenzied market and the median price bumped up to $280,000, an increase of more than 16%.

Although closed sales continued increasing year-over-year through the first quarter, the gains were limited by the inventory crunch. Listings have continued to fall each month through the first half of this year.

April was a healthy month for closed sales: up 10% over 2020 to 60 transactions.

In May, closed sales kept even with the year before at 682 transactions. And for the first time, the median sales price hit $300,000—a 17% increase.

Although closed sales were only up a modest 2.0% in June, new listings hit double digits, rising 11.8% above last June. Despite this, inventory was 50% lower than 2020, with only 1.1 months’ supply. Demand pushed the median price to $310,000, an increase of 19.2%. This was reflected in the percent of original list price received, which rose to 103%.

Rochester and the Southeast

After slumbering through February and March, the market resurged in the second quarter with strong sales in April, May, and June. Lack of inventory frustrated buyer demand and pushed the median sales price to historic highs for the region.

January kicked off with a 6.4% rise in closed sales over last year but saw a 9.8% decline in new listings. As temperatures plunged in February, new listings hit a deep freeze with 19.0% fewer homes entering the market. A 1-month supply of inventory shriveled to just 0.8. Closed sales sank 2.3%. By March, the region was thawing, and closed sales rose 11.0% above 2021, even as new listings shrank 2.5%.

April brought a surge of new listings, up 20.9% over last year, but that barely moved the needle on the 1-month supply of inventory, which was down 60.9% compared to 2021. Despite the relatively bare shelves, inventory moved briskly, and closed sales rose 11.9%. By May, closed sales were up 18.4% and the median sales price hit $250,000, an 11.1% increase. Multiple offers pushed the average sale over the list price to 101.6%, which is 3.9% above last year.

In June, closed sales saw a 13.6% increase over last year. The median sales price reached $272,000, a 16.3% rise over 2020. Although new listings bumped up 5.4%, months’ supply of inventory remained stubbornly low at just 1 month. This marked a 52.4% decline from last June.

Mankato and South Central

Despite having less than a month of inventory for the first two quarters and an anemic supply of new listings, Mankato and the South Central region produced closed sales in the double digits for January and April. With declines reported in May and  June, it was uncertain how transactions would play out going into the third quarter.

The market was vigorous in the New Year with 17.9% more closed sales than January 2020. But at the same time, new listings were down 24.0% over last year. This rose slightly in February when 201 homes came on the market, and closed sales bumped 4.0% over 2020. Competition for properties pushed the median price higher every month:

  • January +12.3%
  • February +11.9%
  • March +10.4%
  • April +10.6%
  • May +3.4%

May was the only outlier for closed sales, marking a 6.3% decline over 2020. Given the growing demand from buyers, this likely reflected the chronically short supply of homes. By June, closed sales recovered slightly, but were still underperforming, down 0.3% from last year. New listings barely inched above 2020, with only 344 homes coming on the market, 0.3% above last year. With only 1.2 months’ supply of inventory—down 47.8%—pending sales dropped to negative double digits at -25.2%.

“During the first half of the year, the real estate market has been in a vicious cycle,” Simon said. “Sellers are concerned about finding a home in this market, so they are delaying putting their house on the market; and with few homes on the market, buyers are chasing up prices on scarce inventory to record levels. It’s a problem for buyers and sellers that will hopefully balance out soon.”

About Minnesota Realtors®
Minnesota Realtors® (MNR) is the membership organization supporting all 21,000 Realtors® in the state of Minnesota. MNR is dedicated to helping Realtors® succeed in providing comprehensive and informed guidance to their customers seeking to buy or sell a home. MNR provides Realtors® with a code of ethics, continuing education, real estate transaction forms, legal services and dispute resolution, as well as lobbying and advocating for homeownership rights and the real estate industry. MNR works in partnership with the National Association of Realtors, as well as more than 15 affiliate regional associations within Minnesota. MNR is a non-profit organization founded in 1919, with headquarters in Edina, Minnesota, and a branch office in St. Paul, Minnesota. Find us at www.mnrealtor.com and follow us on Facebook, Instagram, Twitter and LinkedIn. 

Media Contact: Erin Mathe, 952-261-8148, erin@evocommunications.com.


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