New Listings Up, HOmes for Sale Up, Interest Rates Up
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Twin Cities Market Simmers into Summer
As temperatures start to climb, the local housing market is heating up to a summer simmer. Last month brought continued growth in the number of new homes listed for sale, alongside an increase in the overall number of homes for sale, and home prices remain pretty much steady.
So, what does all this mean if you’re considering buying or selling this summer? I take a deeper dive into these numbers in my monthly market update.
New Listings on the Rise
In May, we saw a bit of an increase in the number of new homes listed for sale across the seven-county Twin Cities metro area. The number of new home listings jumped from 5,340 in April to 5,861 in May. That’s an increase of about 3.7% over May of last year, indicating we’re trending in a good direction.
Here’s a closer look at where these new listings are coming from: the bulk of the new homes coming to market were in the move up and luxury homebuyer brackets.
$500,000 – $800,000 Price Range: This segment saw a 10% jump in new listings compared to the previous year.
Over $800,000 Price Range: New listings increased by more than 5%.
However, it’s a different story for the lower price brackets:
Under $300,000 Price Range: Listings were essentially flat year-over-year.
$300,000 – $500,000 Price Range: Growth was only about 2%.
Lower income buyers are still having a tough time.
Market Active Remains Subdued
Overall, while the number of new listings grew in May, the market is still somewhat subdued.
Take a quick look at this graphic showing new home listing in the month of May from 2019-2024, you can see that last months was still below the pandemic years, and – check out May 2019. That month we saw almost 8,000 new listings hit the market. Yowser.
Homes Staying Longer on the Market
The total number of homes for sale really starts to show the impact of interest rates on the market. In May, the total number of homes for sale grew by about 500 from April and was up year-over-year by about 1,000. This is an increase of about 17%.
Here’s something I think is telling about affordability: The overall number of homes for sale in May in the under $300,000 price bracket was 27% higher than the same month last year. However, this doesn’t mean supply increased significantly. It shows that buyers in that affordable price bracket may have more options, but they still can’t afford to buy due to high interest rates.
Still a Sellers Market
Even with somewhat more inventory on the market, homeowners are still getting 100% of their asking price. This is still considered a seller’s market. However, homes are selling a bit more slowly:
Median Days to Sale in May: Increased to 14 days, up from the previous May.
Under $300,000 Price Bracket: Median days to sale was 20 days, indicating homes are staying on the market longer.
Condos: Median days to sale for condos reached 30 days, up ten days from May of last year.
Interest Rates: A Reality Check
Interest rates on a 30-year fixed-rate mortgage remained at or above 7 percent for the month of May.
I think it’s time for a reality check on interest rates. The interest rate on a 30-year fixed mortgage has been at or above 6% since September 2022 and above 6.5% since May of last year. If you’re waiting for rates to drop below 6%, or maybe even hoping for something around 5%, you might be waiting a long time.
The New Normal is the Old Normal
From September 2009 to April 2022, you could get a 30-year mortgage with an interest rate of 5% or less. That’s twelve plus years of really great rates, leading many to consider that the norm. But historical data tells a different story. From 1971 to 2009, for almost 40 years, interest rates on a 30-year fixed-rate mortgage were above 5% and often above 6%.
Looking at the historical data, that 12-year period of very low interest rates is the aberration. And our new normal is really more like the old normal.
J Trout Lowen is a Minneapolis REALTOR® with Keller Williams Integrity Lakes.