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May 2024 Housing Market Report

By MNR News posted 06-17-2024 09:29 AM

  
Supply levels on the rise as home prices continue their ascent
  • New listings down 1.7%; pending sales fell 5.7%
  • The median sales price increased 2.9% to $350,000
  • The average market time rose to 37 days on market
(Jun. 18, 2024)—According to new data from Minnesota Realtors®, seller activity was flat while buyers were less active compared to May of 2023. Supply levels are up for the 10th month in a row.

Market Activity
May represented the first year-over-year decline in new listings since September 2023 and the first year-over-year decline in pending sales since November 2023.  Although it's crucial to recognize that a single month doesn't establish a trend, it's equally important to note that mortgage rates were measurably higher this May compared to last year. Many consumers were expecting rates to be lower by now, and some buyers are postponing purchase decisions due to the affordability environment. Home shoppers without a sense of urgency have the advantage of time, unlike those compelled to move due to health, employment, financial, or family-related reasons. That said, home prices aren’t likely to soften given the persistent housing shortage. And if rates do ease later this year, those on the sidelines will find themselves facing stiff competition from all that pent-up demand. 

Midyear is a good time to zoom out and look at some year-to-date figures. So far in 2024, there have been 13.9% more new listings and 5.6% more pending sales statewide compared to the same period last year. In other words, new listings rose at over twice the pace of sales. That almost always pushes inventory levels higher. Sure enough, the number of homes for sale was up 16.3% in May at 13,910 active listings. That’s the number of homes on which buyers can write offers. On the one hand, buyers should fare better with 2,000 additional homes to choose from. On the other hand, they should also recognize that there are still just 2.5 months of supply, a long way from the 4-6 months needed to have a balanced marketplace that favors neither buyers nor sellers. Other market dynamics include a 2.9% increase in the median home price and a 5.7% increase in market times. On average, sellers accepted 99.3% of their list price, which is in-line with the 20182020 trend. "Despite the slowdown in new listings in May, anytime we see inventory levels rise overall, it’s a good sign, said Geri Theis, president of Minnesota Realtors. Both buyers and sellers can find opportunities in this market by working with a trusted local Realtor.”

Regional Dynamics
Market activity always varies across areas, price points, and property types. Grand Rapids was the only area with more new listings this May than last. Listings were fairly flat in St. Cloud but down everywhere else. Pending sales were up the most in the Alexandria, St. Cloud and Grand Rapids regions. Home prices rose the most in the Hibbing and Grand Rapids regions. Fergus Falls and Willmar also saw higher prices. The most balanced markets were Bemidji, Detroit Lakes, and Fergus Falls––while the most undersupplied markets were St. Cloud, Rochester, the Twin Cities, and Mankato. 

Twin Cities Metro Overview
From the big city to small towns, farmsteads or the cabin up north, anyone wanting to call Minnesota home will find many reasons to do so. Home prices are higher in the metro but homes are selling more quickly in greater Minnesota. Both new listings and sales performed better in the metro compared to statewide. Twin Cities home sellers accepted 100.1% of their list price in 40 days compared to 99.3% in 37 days statewide. The months of supply metric has underscored a persistent housing shortage for roughly a decade. There are currently 2.3 and 2.5 months of supply in the metro and state, respectively. Inadequate housing development in the face of population growth is a major cause of the undersupply and affordability challenges are impacting every region of our great state. But there are signs the market is rebalancing in a way that could bring needed relief to aspiring-yet-frustrated buyers trying to achieve the dream of homeownership. 

 Regional year-over-year closed sales for May 2024:

State and metro key market indicators year over year for May 2024:

All information is according to Minnesota Realtors® based on data from NorthstarMLS and other MN MLSs. Data is deemed reliable, but not guaranteed.  

To read our full May 2024 Housing Report, click here.

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