Twin Cities Real Estate Market Update for May 2023

Twin Cities Home Prices Stay Steady in May

It’s already summer, at least if you look at the thermostat. The first week of June and we’re already seeing 90s. What happened to Spring? And what happened to the spring housing market? It looks like the market is going to be a late bloomer this year, what with inventory shortages and interest rates hanging in between six and seven percent.

New Home Listings Increase Slowly

Before I dive into the number, jusdt some quick housekeeping. These numbers are for the month of May, and all the statistics presented are drawn from Northstar Multiple Listing Service data.

I’ll start with new listings. The number of new homes coming to market in the seven-county metro did jump up significantly in May.

Last month we saw 1,138 more new listings come on the market than we did in April. However, new listings are still down almost 19 percent from the last year. The number of new construction home listings did inch up by about 26 units.

New Home Listings by Price

New home listings in the Twin Cities during May 2023 broken down by price category.

Looking at the number of new listings by price, you can see inventory shortage is even tougher in the starter home price range. That’s homes selling or $300,000 or less.

In fact, the number is new listings coming to market in May fell below last year in every category but one. The number of new home listings selling at $800,000 and up rose by 6 percent.

If you’re looking for higher end or luxury homes, you should take note.

Total Number of Homes for Sale Rises

The total number of homes for sale in May also increased, but just slightly, and that number is still 10 percent lower than last year. That is an indicator that homes are selling quickly. If homes were taking longer to sell, we would see the number of total homes for sale growing faster.

This is Still a Strong Sellers Market

The Twin Cities is still in a tight sellers market. Months’ supply, a measure that indicates how long the current inventory of homes would last given the current sales

Graphic showing the months supply of homes for sale in the Twin Cities seven-county metro.

rate if no additional new houses came on the market, stayed steady from April to May at 1.5 months.

That is well below what we would consider a balanced market. One area where we’re seeing a little more supply is in townhome and condos. Months supply for those is up to 1.9 months.

This is Still a Strong Sellers Market

The number of days it takes for a home to sell, measured as median days on market—the median number of days between when a house is listed for sale and when it goes off the market, dropped from 16 days in April to 12 days in May. That is still double the number of days on market we say last May.

Home Sale Prices Hold Steady from April to May

The median sale price of a home in the seven-county metro was $370,000 in April and that did not change in May. Home prices are holding steady, although we are seeing a lot of homes sellers getting multiple offers.

On average, sellers are getting 100.3 percent of their asking price, about the same as in April.

Mortgage Interest Rates Settle between 6 and 7 Percent

Lastly, let’s take a look at interest rates. Home mortgage interest rates were sitting in the six percent range in the first week of June for all types of mortgages. And it seems the Federal Reserve is signaling they may take a pass on a rate increase in June. That would be good news for homebuyers and home sellers alike.

What Does this Mean for Homebuyers and Sellers?

If you’re considering selling your home this summer, you can expect strong buyer demand, but with interest rates where they are, it won’t be like the pandemic buying frenzy of 2020 and 2021. If you’re a buyer, the lack of inventory will make buying a new home more challenging but it seems both interest rates and home prices have stabilized, and that will take some of the uncertainty out of the buying process.

Just remember, every situation is different. If you want to know how these market trends might affect your plans to buy or sell a home, you can call, text, or email me. I’m here to help.

J Trout Lowen is a Minneapolis REALTOR® and an expert at helping homebuyers and sellers navigate the Twin Cities housing market.

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