Somewhat Favorable Rates Fuel Modest Sales Gains Though Buyer Activity Flat On Year
Key Updates: According to new data from the Minnesota state and Twin Cities metro REALTOR® Associations, new listings, pending sales, inventory and prices all rose again in April.
- New listings rose 7.2% statewide and 5.5% in the Twin Cities.
- Signed purchase agreements were up 2.8% statewide and 3.6% in the metro.
- The median sales price increased 2.9% statewide to $360K and 3.5% in the metro to $399K.
|
|
Sellers, Buyers and Housing Supply
In the wake of tariff announcements at the beginning of the month, April brought significant bond and stock market swings. That trickled over into mortgage rates, which swung from a low of 6.6% to nearly 7.1%. April mortgage rates hovered below January and February levels but above March levels. Given the affordability environment and buyers’ sensitivity to payments and mortgage rates, the fluctuation in rates partly fueled gains in signed purchase agreements (+2.8% statewide; +3.6% metro). So far this year, however, seller activity is up about 6.0% both in the metro and statewide while buyer activity is down 0.1% and 0.4% respectively.
With the spring buying season upon us, home buyers and sellers face a mixed bag of uncertainty and opportunity. “On the one hand, the economic and trade uncertainty might’ve had an impact on certain buyers,” said Patti Jo Fitzpatrick, President of Minnesota Realtors®. “But on the other hand, many aspiring buyers are seeing less competition and more inventory this spring, giving them more time to consider options and find the right home.” In fact, inventory levels rose 8.5% statewide to the highest April level since 2020. The Twin Cities metro showed a 4.8% increase.
Beyond new housing, homebuilders have also built complex supply chains that rely heavily on global commodity markets. But the effects of trade obstacles and higher costs ripple outwards. In addition to boosting consumer confidence, addressing recent trade hurdles would also provide the certainty businesses need to retain employees and meet payroll. “A healthy housing market depends on employed buyers able to make monthly payments and handle maintenance costs,” said Frank D’Angelo, President of Minneapolis Area REALTORS®. “Today’s buyers are highly qualified but sales this year will hinge on the affordability environment.”
New homes make up around 10% of our market, but sales of newly built homes fell nearly 13.0% while existing home sales were up 5.6% year over year. The fact that new homes have a roughly 45.0% price premium over existing homes is a factor in the sales dip. But the new home segment is much better supplied (compared to existing homes) and is technically in balance or even slightly oversupplied. While statewide single family and townhome sales rose about 4.0% and 8.0% respectively, condo sales fell nearly 17.0%. Zooming in on the metro, sales under $1M rose 3.5% but sales over $1M gained 18.0%. Those figures roughly match statewide activity.
Prices, Market Times and Negotiations
Despite inventory limitations and higher mortgage rates, highly qualified serious buyers remain active and determined. Prices are up partly because both new homes and $1M+ luxury homes have made up a larger share of the pie. The same goes for larger homes over 2,500 square feet. Overall, the statewide median home price was up 2.9% to $360,000, while the metro median price rose 3.5% to $398,900. And those sales took 44 days to go under contract statewide and 50 days in the metro—both up modestly from last April.
Condos in the Twin Cities took 89 days to sell while Rochester condos took 36 days, on average. Prices rose nearly 11.0% in Grand Rapids but fell nearly 15.0% in Detroit Lakes. Bemidji sellers were willing to accept under 93.0% of their list price while metro sellers received 99.7%. Statewide, sellers accepted offers at 98.8% of their list price. “Most people think about the housing market as monolithic,” said Jennifer Livingston, President of the Saint Paul Area Association of REALTORS®. “The truth is that the ‘statewide’ and ‘metro’ markets are comprised of many different regions, cities, neighborhoods, price points and segments. Fortunately, there’s a home out there for all motivated buyers despite the different markets throughout Minnesota and while homes are taking a bit longer to sell, sellers who price strategically are still getting strong offers—often close to or at full list price.
Locational Differences | Minnesota Statewide
Market activity always varies by area, price point and segment. Regions such as Detroit Lakes, St. Cloud and Willmar saw the largest gains in seller activity. Rochester, St. Cloud and Mankato had the largest gains in pending sales. Homes sold the fastest in the St. Cloud and Duluth/North Shore regions along with Rochester and the metro. Prices were highest in the metro followed by Brainerd and Rochester. The most affordable regions of the state were Hibbing/Virginia, Willmar and Bemidji. Every region is undersupplied or balanced except Hibbing/Virginia.
Locational Differences | Twin Cities Metro
For cities with at least five sales, Arden Hills, Bayport and Hanover had the largest sales gains. The highest priced areas were Orono, Excelsior, North Oaks and Deephaven while the most affordable areas were Norwood Young America, South St. Paul and Columbia Heights. Homes took the longest to sell in Greenfield, South Haven and Deephaven and sold the fastest in Anoka, Montrose, Fridley and Richfield. The most balanced markets were Wayzata, Cologne, Ham Lake and Excelsior while the most undersupplied markets were Lonsdale, Arden Hills, Mahtomedi and Crystal.