Real estate agents hung thousands fewer "sold" signs in the Twin Cities last year than in record-breaking 2021, which some might interpret as a real estate cool down.
If only it were that simple.
Home prices have defied the decline in sales, rising to record highs.
"The burners might be off, but the pans are still hot," said Dan Frank, a Twin Cities real estate agent who says that although bidding wars are happening, buyers aren't resorting to the kinds of buy-it-any-cost tactics they employed last spring.
In 2022, the number of home sales fell by double digits.
Mortgage rates doubled in the final six months of the year.
And yet house prices around the metro area and Minneapolis and St. Paul neighborhoods grew by double digits over the previous five-year average, according to the Star Tribune's seventh annual Hot Housing Index.
The reason? First, the Twin Cities housing market is chronically undersupplied. And, second, the Federal Reserve's consistent and aggressive interest rate hikes, which are meant to dampen consumer spending, are working their way through the real estate market in uneven ways.