Bidding wars ignite across the state for scarce inventory
In August, Minnesota’s residential real estate marketplace was exceptionally busy, with pending sales up +16.3% and the median sale price climbing +9.3% versus August last year. By contrast, closed sales were nearly flat to last year at -0.2%, reflecting an acute shortage of homes.
“As Realtors® and consumers became familiar with guidelines for living with the virus, more consumers started considering – and acting upon – their desire to purchase a home,” said Chris Galler, CEO of Minnesota Realtors®.
Inventory issues continue to plague first-time home buyers. The quantity of homes for sale in August dropped 36.2% when compared to last year. Competitive pressures have sparked bidding wars among home buyers, as sellers field multiple offers. By the end of August, there was only a two-month supply of housing available for sale, which is a historic low.
“Home buyers and MN Realtors are having a difficult finding homes for consumers to purchase,” said Galler. “In 2018 and 2019, we had more than 23,000 homes available for prospective purchasers. In 2020, there is less than 15,000.”
The median price for a home increased significantly in August. The median price for a home statewide was $283,075, up 9.3% year over year, which is the highest in Minnesota’s history. The median is the midpoint for all homes sold, meaning there were an equal number of homes sold above and below that price point.
“The driving forces behind the median price increase are the lack of inventory, historically low home mortgage interest rates, and consumers realizing they need more space as a result of the pandemic,” said Galler. “Unless there is a significant rise in interest rates, we anticipate this trend will continue.”
Year-over-year metrics summary:
- Closed sales: -0.2% to 9,777
- Median sales price: +9.3% to $283,075
- Average sales price: +9.1% to $323,788
- New listings: -1.5% to 11,079
- Pending sales: +16.3% to 10,268
- Days on the market: 0.0% to 42 days
- Homes for sale: -36.2% to 14,875
- Months supply of inventory: -39.4% to 2.0
Pending Home Sales Across Minnesota by Region
Increased pending sales indicate that the strong housing market and a deluge of delayed spring activity will continue into fall. With only one region (Southwest) showing a decrease in pending sales year over year, the increases demonstrate an active market. This is the third consecutive month that Minnesota has seen double-digit increases in pending sales. See chart for more details comparing August 2020 to August 2019.
The seven-county Twin Cities region comprises Anoka, Carver, Dakota, Hennepin, Ramsey, Scott and Washington counties. However, the official Minneapolis-St. Paul-Bloomington metropolitan statistical area recognized by the Census Bureau consists of 16 counties.
View full regional and county report here.
View statewide report here.
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.