Inventory Shrinks as Prices and Interest Rates Rise

By MNR News posted 03-10-2022 13:37

  
Closed sales and new listings were down in February
MINNEAPOLIS (March 10, 2022) — Shrinking inventory and increasing prices pushed closed sales down 12.9% over the previous February. New listings were down 8.5% compared to last year, with just 5,801 homes added to the market. Despite this, consumer demand remained high, with the median sales price rising 7.8% to $304,500, and the average price hitting $353,409, up 10.3% over last year. Sellers were receiving 99.7% of their asking price as the statewide supply of homes plummeted 21% to just 6,606 units. As inflation nudged interest rates up to 4.45% for a 30-year fixed-rate mortgage, the affordability index—which measures whether an average family earns enough to qualify for a loan on a typical home—sank 11.6% over last year.

“We simply don’t have the inventory levels necessary to meet demand,” said Chris Galler, CEO of Minnesota Realtors. “The combination of a falling Affordability Index and rising interest rates is causing significant problems for first-time homebuyers who have been counting pennies and waiting anxiously to purchase a home of their own. Realtors across the state are working to help counsel home purchasers and make them aware of these unique market dynamics.”

February year-over-year summary of key market indicators:

  • Closed sales decreased 12.9% to 3,919
  • Median sales price increased 7.8% to $304,500
  • Average sales price increased 10.3% to $353,409
  • New listings decreased 8.5% to 5,801
  • Pending sales decreased 10.2% to 5,237
  • Days on the market decreased 6.3% to 45 days
  • Homes for sale decreased 21.0% to 6,606

Closed Home Sales Across Minnesota by Region

In February, closed sales declined in 10 regions compared to a year ago, bringing Minnesota’s average number of closed home sales down 12.9% year over year. Three regions reported increases, with Southwest Central marking double-digit gains, at 11.1%, Southeast at 5.9%, and Southwest at 1.6%. Eight regions saw double-digit declines in closed home sales. The largest of these were West Central, down 27.4%, East Central, down 18.1%, and Northwest, down 17.6%. See the chart below for more details comparing closed home sales for February 2022 to February 2021.

The seven-county Twin Cities region comprises Anoka, Carver, Dakota, Hennepin, Ramsey, Scott and Washington counties. The official Minneapolis-St. Paul-Bloomington metropolitan statistical area recognized by the Census Bureau consists of 16 counties, on
which MAR & SPAAR local associations report
.

View full regional and county reports here.

View statewide report here.

About Minnesota Realtors®

Minnesota Realtors® (MNR) is the membership organization supporting all 22,000 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 Minnetonka, Minnesota, and a branch office in St. Paul, Minnesota. Find us at  www.mnrealtor.com and follow us on Facebook, Instagram, Twitter and LinkedIn

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