There were 1.1% fewer newly listed houses in the Twin Cities last month, the smallest annual decline since May, meaning there are a few more options remaining on the market for homebuyers during October.
Twin Cities home sales continue to dwindle, and prices continue to rise
Mortgage rates are ticking down and the decline in newly listed houses is shrinking, though.
November 15, 2023 at 8:16PM
Still, the market favored sellers last month as buyers outpaced them in many parts of the metro, boosting the median price of all sales 2.4% to $365,000, according to a joint sales report from the Realtors' associations in Minneapolis and St. Paul.
"Inventory is too low for prices to be falling much," said Jerry Moscowitz, president of Minneapolis Area Realtors. "But rates are too high for prices to be rising much."
A lack of supply has continued to dog homebuyers as would-be sellers with historically low mortgage rates opt to stay put rather than list their home for sale.
During the month, buyers signed 3,470 purchase agreements, 4.7% fewer than last year at this time. With new listings nearly on par with last year, buyers were left with 8,630 property listings at the end of the month, nearly 8% fewer than last year.
For much of October, the average 30-year fixed-rate mortgage hovered around 8%, but during the last week of the month, rates dipped to an average of 7.76%, according to a weekly report from Freddie Mac. That was less than a full percentage point higher than a year ago. Rates have kept ticking down, with the latest report showing the 30-year dipped even more to an average of 7.5% for the week ending Nov. 9.
Statewide, the market was slightly more in favor of buyers, with new listings increasing 3.2% in the past year and pending sales falling half as much as they did in the Twin Cities metro, according to the Minnesota Association of Realtors. That left total inventory at the end of the month on par with last year.
Large increases in the areas surrounding Mankato, Willmar and Alexandria drove those listing gains, with sales increasing the most in the Fergus Falls, Rochester and Willmar regions.
Rates — and a shortage of listings — continue to be the biggest drag on home sales. The associations said with mortgage rates hitting a 23-year high recently, the Housing Affordability Index in the Twin Cities fell to its lowest level since at least 2004. The monthly payment on the median-priced home now stands at $2,650, more than $1,000 higher than three years ago when house prices and mortgage rates were lower.
"Buyers are feeling the triple punch of low inventory, rising prices and higher rates," said Brianne Lawrence, president of the St. Paul Area Association of Realtors. "That's kept a good chunk of buyers sidelined and reflects a real shift from the last few years. That said, there has luckily been some easing in mortgage rates that may continue."
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