Finance & Commerce article: Twin Cities home sales fall, home prices rise

Published

Brian Johnson//July 17, 2023

Minneapolis and St. Paul Realtor groups said Monday that Twin Cities home prices rose in June, but sales activity — weighed down in part by rising interest rates and tight inventory — was slower compared to last year.

The median sale price now stands at $382,000, up 0.5% from June 2022, according to a report from the Minneapolis Area Realtors and St. Paul Area Association of Realtors. The uptick comes after two consecutive months of slight declines.

Inventory is still in short supply, putting sellers in the driver’s seat. On average, sellers accepted offers at 101.3% of their list prices. Despite the rising costs, homes are “still selling faster than in June 2018, 2019 and 2020,” the report says.

“Some remain convinced of an impending crash, but we’re still not seeing it,” Brianne Lawrence, president of the Saint Paul Area Association of Realtors, said in a press release. “Two months of prices softening around 1% before climbing again is more like a blip or pause than a downturn.”

Even so, some key market indicators are in negative territory compared to last year. That includes new listings (down 16.5%), inventory (down 13.4%), signed purchases agreements (down 10.8%) and close sales (down 18%).

Some would-be sellers are holding out for better prices. At the same time, rising interest rates continue to bother prospective buyers, who are hesitant to give up their 3% rate for a 6.8% deal, the report notes.

“Even with fewer sales in light of higher rates, homes are still selling relatively quickly while sellers get relatively strong offers,” Jerry Moscowitz, president of Minneapolis Area Realtors, said in a statement. “That’s partly driven by homeowners with rates under 4% staying put.”

Some product types are faring better than others.

In June, for example, sales of new homes were up 24.3%, while existing home sales were off 12.8%. Results were mixed among single-family homes (down 13.7%), townhomes (up 0.8%) and condos (down 3.2%).

When inventory is tight, new homes have an edge in part because they are more accessible, Lawrence said in an interview.

“If somebody needs to get into something, that’s the way to go because they can get in and close quickly,” she said.

Results also varied by location.

Sales in the core cities were down by double digits (12.1% in Minneapolis and 12.9% in St. Paul), while Annandale, Shorewood, White Bear Township and Delano posted the largest sales gains during the month, the report notes.

Other suburban locations aren’t doing as well. White Bear Lake, New Hope, New Prague, Zimmerman and Hudson “all had notably lower demand than last year,” according to the report.

The report also finds that foreclosure sales were up 76% in June, but Lawrence doesn’t read too much into that because the sample size is small.

“We haven’t been seeing a lot of foreclosures, and now there’s a couple that are starting to trickle into the market,” she said. “I’m still not seeing a lot of foreclosures in the metro area. They’re out there, but they are still few and far between.”

This article was first published in Finance & Commerce on July 17, 2023. (Finance & Commerce.com)