Hint: Buyers are Springing Up like daffodils

What's Hot (and Not) in the Twin Cities Real Estate Market

It’s spring in Minnesota and you know what that means? Home buyers and daffodils are coming up.

Yep, the spring housing market starting to take off here in the Twin Cities. The number of new home listed for sale is growing, home sales are up, but not everything is flowering in our garden. This month, l talk about what’s growing and what’s not in the local real estate market.

More Sellers Entering the Market

The number of new homes coming to market continued to grow at a modest pace.

In March, we saw total number of new home listings jump by about 500 from February, and about 5 percent rom the previous March.

The biggest bump in new listings last month came in the $300,000 to $500,000 price range. The number of new listings there jumped up 15 percent in March from the same month last year, and number of new homes listed for sale in that price bracket has more than doubled since December.

We are not seeing that same trend in other price brackets. New listing under $300,000 were down almost 8 percent in March compared to a year ago. We continue to see the impact of rising home prices and higher interest rates there.

And in the $500,000 to $800,000 price ranges, new listing were up just 2 percent year over year. New listings over $800,000 saw a health increase, up 7.7 percent year over year.

Inventory of Homes for Sale Up Year-Over-Year

That increase in new listing is also showing up in the total number of homes for sale which rose 10 percent from March of last year even as the number of homes for sale actually declined a little bit between February and March. That drop is a reflection of stronger buyer activity as the spring housing market gets underway.

The number of closed sales has jumped almost 30 percent since January, which is typical for the this time of year, and the median number of days it take sell a home also fell from 37 in February to just 22 in March.  

Even with more homes coming to market, this is still a strong sellers market.

Home Prices Edge Up for Homes Above $800k

Stock image of larger home

Home prices rose again in March for the second month in a row after staying nearly flat through the winter. The median home sale price rose about $2,000 in March to $374,000. Prices have been slowing rising since January.

That said, the only price category where we are seeing prices rise is homes selling at $800,000 and above. In that category, prices jumped 8 percent since the beginning of the year. The median sale price in homes priced under $800,000 remains pretty flat. There was a small bump in home prices January to March in the $300-$500,000 price range, just about 1 percent.

That’s the same story when I look at the average sales price over the past 12 months. Home prices are largely flat for homes selling under $800,000.

Just a reminder. The average sale price is the average price of all the homes sold in the previous 12 months. The median sale price is the midpoint. Half the homes sold above that price and half sold below it.

Interest Rate Cuts in Doubt

Mortgage interest rates, widely considered to be one of the biggest suppressors of housing market activity these days, stubbornly hung around 6.8 to 7 percent range in March for a 30-year fixed-rate mortgage. And then rates began to climb in early April.

While still below the average rate over the past 50 years for a 30-year loan (7.78%), but with those pandemic era 3 and even below 3 percent rates still visible in the rearview mirror, sellers see 7 percent interest rates as disincentive to trade in their low-interest mortgage for one at double the rate.

Federal Reserve Chair Jerome Powell said  in March that the Fed was still planning rate cuts this year. That could only be good news for the housing market.

By mid April, those rate cuts again were drifting away out of reach. 

It will be interesting to see how the Federal Reserve’s non action will impact the housing market. Can home sellers and home buyers continue to sit on the sidelines for another year?

J Trout Lowen in a Minneapolis REALTOR®

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