Inventory in the 13-county Minneapolis-St. Paul metropolitan area is up 8.7 percent from last year. August was only the sixth month of year-over-year inventory gains. Consumers now have 18,205 homes from which to choose. New listings were flat, increasing just 0.1 percent to 6,958, while market-wide pending sales decreased 7.0 percent to 4,802. Overall closed sales were down 7.3 percent from last year to 5,291 units.
With 4.4 months supply of inventory, the absorption rate is consistent with a transitioning market approaching balanced territory. Sellers are still seeing multiple offers on quality listings but buyers don’t have to compete quite as hard over limited supply. The sales mix continued to favor traditional homes that sell in less time and at higher price points. The median sales price rose 5.3 percent to $219,001. That’s the highest August median sales price since 2007, and the 30th consecutive year-over-year increase.
Prices hinge upon a variety of factors, including supply and demand but also changes in market share based on area or segment. While new listings rose only 0.1 percent overall, traditional new listings rallied 10.9 percent higher while foreclosure and short sale new listings fell 49.3 percent and 46.6 percent, respectively. Similarly, overall closed sales were down 7.3 percent, but traditional closed sales rose 4.6 percent while foreclosure and short sale closings fell 50.4 percent and 58.0 percent. Market-wide inventory levels increased 8.7 percent but traditional inventory surged 24.5 percent while foreclosure and short sale inventory levels both fell dramatically.
Contrary to most economists’ forecasts, interest rates remain lower than last year. That’s helped buyers take advantage of the attractive affordability environment. The Twin Cities housing affordability index was mostly flat, down just 1.1 percent from last August to 176 – meaning the median household income was 176 percent of what is necessary (or 76 percent greater than the minimum needed) to qualify for the median-priced home under current interest rates. While the affordability index is below its peak in 2012, it remains well above its long-term average.
Those shopping for homes now have the largest pool of traditional properties to choose from since mid-2010. A growing share of activity now falls into the more desirable traditional segment – 90.6 percent of new listings, 89.4 percent of closed sales and 88.0 percent of all inventory. Those are the highest figures since April 2007, August 2007 and July 2007, respectively. Days on market fell 2.9 percent to 68 days; the median list price rose 6.9 percent $235,000; and price per square foot rose 5.3 percent to $126.