In addition to a better rate environment, those out home shopping were met with more choices and inventory than last year. There were 10,555 active listings statewide in February, 17.5% more than in February 2023. Even though listings are on the rise, demand continues to outweigh supply, as last month’s median home price stood at $329,000—an increase of 4.4% from last year. If rates fall further, as many experts predict, we could see buyer demand surge. If this happens, home prices are likely to follow suit. Homes also sold slightly faster than in February of 2023, averaging 52 days on the market. And sellers accepted offers at 96.7% of their list price compared to 96.5% last year. “There’s been a lot of activity in the early spring market this year,” said Patti Jo Fitzpatrick, President-Elect of Minnesota Realtors®. “Buyers are benefiting from lower mortgage rates and more inventory, yet there’s still a real need for more supply. Affordability concerns haven’t gone away even as we’re seeing some good progress.” The “affordability index” dropped below 100 to a measure of 96, meaning a family earning the median income cannot afford a median-priced home in Minnesota.
Regional Dynamics
Market activity always varies across areas, price points, and property types. The Detroit Lakes, Duluth, Alexandria, and Brainerd regions saw the largest gains in listing activity, while pending sales rose the most in the Detroit Lakes, Alexandria, and Grand Rapids regions. Home prices rose the most in the Bemidji, Hibbing/Virginia, and Detroit Lakes regions. The most balanced markets were Bemidji and Detroit Lakes while the most undersupplied markets were Rochester, St. Cloud, and the Twin Cities.
Twin Cities Metro Overview
Price growth was even between the metro and the state overall. There was also no significant difference in the increase in sales and listings. Metro home sellers got 97.5% of their list price after 59 days compared to 96.7% in 52 days statewide. With 1.8 and 1.9 months of supply in the metro and state, respectively, the housing supply shortage—and related affordability challenges—are affecting every region of the state. Inventory levels rose both for the metro and statewide. Minnesotans are rightly concerned about rising monthly payments and keeping up with maintenance costs, rising insurance rates, and taxes. These challenges are putting the dream of homeownership out of reach for far too many.
Insights and Anecdotes
Reports from agents across the state mimic what the data tells us: that activity has picked up notably for both buyers and sellers. The luxury market remains strong and cash sales remain elevated as rates hover just under 7.0%. Overall, and perhaps surprisingly, it’s still a seller’s market—just not in every area, neighborhood, or price point.
Regional year-over-year closed sales for February 2024:
State and metro key market indicators year over year for February 2024: