Twin Cities home sales down 18% last year, the lowest in 20 years

Higher mortgage rates — and a lack of house listings — stifled buyers in the Twin Cities metro last year, causing sales to fall to the lowest level in more than 20 years.

Still, with strong demand and too few options, sale prices managed to eke out a modest gain as buyers battled for a dwindling number of properties.

“We saw fewer listings and fewer sales; and yet higher prices, surprisingly strong offers and relatively quick market times,” said Amy Peterson, president of the St. Paul Area Association of Realtors, in a statement.

Buyers closed on 44,310 houses, condominiums and townhomes throughout the 16-county metro area last year, 17.6% fewer than 2022, according to a year-end report from a pair of trade groups that represent Twin Cities-area agents. The median price of those sales was $368,000, a 1.4% annual increase.

For the second year in a row, buyers and sellers in the Twin Cities have been dogged by the impact of higher mortgages, which began rising midway through 2022 after record low rates drove home sales — and prices — to record highs.

One of the biggest challenges for buyers last year was the lack of listings as higher rates kept would-be sellers on the sidelines and made buying a house more expensive.

Last year, sellers listed 59,581 properties, 12.4% fewer than the previous year. Though it took slightly longer for houses to sell, there were still more buyers than sellers in many parts of the metro.

By the end of the year, there were only enough houses on the market to last 1.9 months. The market is considered balanced between buyers and sellers when there’s a five- to six-month supply of listings.

On average, houses sold more quickly than normal, in just 40 days, though that was a 29% increase over the previous year. Despite that increase, houses sold more quickly last year than they did in 2019 and 2020.

The shortage of listings in the metro forced buyers frustrated by the lack of options to consider a newly built home, giving home builders a much-needed boost. On Monday, Housing First Minnesota, said that after a mostly robust 2023 for home builders, single-family building permits posted a 10% annual increase during January.

Apartment developers, however, continue their retreat. During the month, there was a 57% decline in the number of planned multifamily permits.

The report from the Minneapolis Area Realtors and St. Paul Area Association of Realtors said sales of newly built homes increased 11.3%, while sales of existing homes were down 17.7%.

Those groups said that since 2020, the typical payment on a home that sold for the median price has increased from about $1,100 to $2,700 per month.

Demand varied dramatically from city to city and from region to region across the state. The Minnesota Association of Realtors said that statewide, sales fell to the lowest level since 2010, but that the median price of those closings has increased every year since 2012. During December, for example, the median price of all sales across the state increased 3.3% to $315,000 with both new listings and pending sales posting a healthy annual increase.

Looking forward, agents say the prospect of slightly lower mortgage rates this year will likely unleash more listings — and sales.

“If rates do come down, a lot of pent-up demand that’s been sidelined recently will be unleashed which could lead to another frenzied market with listings selling for over asking price,” said Jamar Hardy, president of Minneapolis Area Realtors.