Housing prices in the Twin Cities were flat in July, according to newly released data, and the numbers of homes listed and sold were lower compared to the same month in 2022.
The data — released by the Minneapolis Area Realtors and the St. Paul Area Association of Realtors — showed the median sales price remained at $375,000, after a slight increase in June and slight decreases in May and April. The number of signed purchase agreements fell by 9.5 percent compared to July 2022, and new listings dropped by 16 percent.
Jerry Moscowitz, president of the Minneapolis Area Realtors, said buyers and sellers are adjusting to increased interest rates, which are causing some to hold out longer to find the right home.
“When you go from a 3 or 4 percent to a 6 to 7 percent (interest rate), there's a change in the type of home that you’re able to buy,” he said.
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The homes that are in good shape, Moscowitz said, are moving quickly, but homes that need some work are sitting on the market longer due to the higher interest rate.
Sellers accepted offers averaging 100.8 percent of the list price in July — suggesting a tight supply of housing. Moscowitz said there’s just over two months' worth of inventory available in the Twin Cities housing market. A balanced market supply, according to the two Realtor associations, is about four to six months' worth of available housing stock.
“The numbers right now are probably much more in line with 2018, 2019 on sales,” Moscowitz said, “which again, nobody was really considering a bad real estate market. This just is different than what we’ve had the last two or three years.”
The more-accelerated housing market in 2020, 2021 and 2022, Moscowitz said, was partly due to lower-than-expected interest rates and homeowners trying to fulfill new needs because of the COVID-19 pandemic.
With the future of interest rates hard to predict, Moscowitz suggested that prospective homebuyers consider the factors they can control when trying to decide if it’s time to buy. If personal finances and the right home line up, there’s the potential to refinance if interest rates drop in the future.