It has been a cautious year for buyers as the higher interest ratesand increasing home prices have continued to make homes less affordable. Through August, there have been 25,771 soldlistings. This number is about the same as one year ago, but the percentage of new listings sold is 5.5% less (9.3% less than 2022 & 11.9% less than 2021). In addition, our “Days on Market” this year has been consistently about 5 days longer than last year. Therefore, on average, it’s taking homes longer to sell.
During the week prior to Sept. 18th, we have 7,749 Active listingson the market in the 7 County Metro (fyi, Jan. 1st was 4,809). That number is around 1,200 more units than in 2023, 2022, 2021, & 2020. Also, we currently have a 2.5 month supply of Activeinventory. This means for every 1 buyer, there are 2.5 listings tochoose from (a balanced market is 6 months of inventory bydefinition). 2.5 months of inventory is still a seller’s market, butit’s an increase from 2.1 months in 2023, 1.7 months in 2022, &1.4 months in 2021 (making it more favorable for buyers).
In addition, interest rates have been on a decline for 5 months now. Currently they are in the low 6’s, which are the lowest levelssince Feb. 2023. The Feds did make a 1/2 of a percent rate cut this week. A rate cut was expected and mortgage rates havealready been lowered with this in mind. So, we’re not going tosee significant drops in response to this rate cut right now.
Lastly, home prices are up 3.82% year-over-year. However, interest rates are down over 1% from August 2023. This means the average price home is $164/mo. less expensive than ayear ago. It’s not always about home prices...it’s about affordability!
What should we expect next? Typical Minnesota seasonality patterns. We usually peak in Inventory in late September through
October before decreasing to a low in January. Home prices also have past their peak (June/July, August) and decrease by a few percent in December/January. With a decrease in interest rates, more inventory, and home prices seasonal decreasing...this could be a great opportunity for those looking to buy!