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New Listings and Pending Sales Rise, Interest Rates Begin to Fall

By MNR News posted 01-16-2024 10:55 AM

  
MINNEAPOLIS, Jan. 16, 2023 —The 2023 housing market closed the year on a high note, as mortgage rates dropped below 7% in late December and new listings rose by 12%, the third consecutive month of increases.

As of this week, 30-year fixed rates are just above 6.5%. Since much of 2023 was a high interest-rate environment, even modest rate declines will ignite housing market activity. This is reflected in various metrics from December, most notably pending sales, which were up 8.7% from last year, marking the first year-over-year increase in that category since November 2021.  

While buyers welcome falling rates, rising home prices remain a stubborn obstacle, as the median home sales price was up 3.3% to $315,000. This is a byproduct of an undersupplied housing market. While the months’ supply of homes improved 18.8% over last year, December still had just 1.9 months’ worth of available inventory, a sign that it’s still a seller’s market. A 4-6 month supply is typically needed to constitute a balanced market. Affordability challenges persist, driven primarily by limited inventory resulting in higher prices.

“While market activity typically slows with the onset of winter in Minnesota, falling interest rates are attracting both sellers and buyers back into the market,” said Geri Theis, 2024 president of Minnesota Realtors (MNR). “It’s likely that the 2024 spring market will be competitive, especially if mortgage rates continue to fall.”

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

  • Closed sales decreased 4% to 4,324 

  • Median sales price increased 3.3% to $315,000 

  • Average sales price increased 3.7% to $375,175 

  • New listings increased 12% to 3,432 

  • Pending sales increased 8.7% to 3,621 

  • Days on the market rose 2.2% to 47 days  

  • Homes for sale increased 1.9% to 10,336 

Regional Dynamics 

In December, closed sales were down 4% statewide. Certain regions, however, saw a substantial increase in that metric compared with December 2022. As represented in the table below, the Headwaters, North Central, and South Central regions saw the highest increases year over year. With pending sales up in December 2023 for the first time in over two years, we expect closed sales figures to follow suit in January 2024. Just how much they rise will depend on closing timelines and broader market conditions. 

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. 

To access our full December 2023 Housing Market Report, click here.

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