Advocacy Report – March 2023

SPAAR - 03/20/2023

MARCH 2023

Current Market Conditions

In its continued effort to curb inflation, the Federal Reserve raised its benchmark interest rate in February by a quarter-percentage point to 4.50% - 4.75%, its 8th rate hike since March of last year, when the interest rate was nearly zero. Mortgage interest rates have dipped slightly from their peak last fall, leading pending sales to increase 8.1% month-to-month as of last measure, but affordability constraints continue to limit homebuyer activity overall, with existing-home sales declining for the twelfth consecutive month, according to the National Association of Realtors® (NAR).

New Listings in the Twin Cities region decreased 24.3 percent to 3,423. Pending Sales were down 23.6 percent to 2,932. Inventory levels rose 7.1 percent to 5,327 units.

Prices were fairly stable. The Median Sales Price increased 0.6 percent to $342,000. Days on Market was up 40.9 percent to 62 days. Buyers felt empowered as Months Supply of Homes for Sale was up 44.4 percent to 1.3 months.

With buyer demand down from peak levels, home price growth has continued to slow nationwide, although prices remain up from a year ago. Sellers have been increasingly cutting prices and offering sales incentives in an attempt to attract buyers, who have continued to struggle with affordability challenges this winter. The slight decline in mortgage rates earlier this year convinced some buyers to come off the sidelines, but with rates ticking up again in recent weeks, buyers are once again pulling back, causing sales activity to remain down heading into spring.

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