Twin Cities Housing Report October 2018
The Minneapolis-St Paul Housing Market Overview
As we look at the Twin Cities Housing Market Statistics for the first month of the final quarter of 2018 the one thing that hasn’t changed for months is the shortage of properties for sale in the lower end of the market. With so few homes that fit their budget, coupled with rising home prices and interest rates, would-be buyers continue to struggle with fulfilling their dream of ownership. Homes at this price range are still selling quickly, but we are finally starting to see that shift we have been talking about, in market conditions overall as we look at narrowing gaps in year over year data for sales, inventory, and price.
What’s Up Doc?
As we compare October of this year to October 2017, we find new listings up 9.2 percent, closed sales rose 3.4 percent, the percentage of list price received up 0.2, and the median sale price of $265,000 up 8.6 percent. Meanwhile, pending sales were down 1.7 percent, inventory levels dropped 2.2 percent, days on the market fell 7.7 percent. In summary, in the Twin Cities 16 county metro at least, we are still experiencing fewer homes on the market taking less time to sell with prices even on an upward trajectory.
What About the Economy?
Our local economy remains strong. The unemployment rate for October in the Twin Cities was 2.1 percent and 2.8 for the entire state. Both are lower than the national average of 3.7. Yea Minnesota! Consumer confidence is still strong, but there have been concerns and rightly so. The stock market took some heavy downward hits, although it has rallied. The trade wars and higher costs for raw materials and finished goods that it brings with it are having effects on the future job market (think GM impending layoffs) and retail pricing.
On the mortgage front, rates are still hovering and holding steady at 5 percent, but we have another Fed meeting right around the corner on December 18-19. The expectation is another hike. Originally four more were predicted for 2019, but a November announcement indicated they were considering slowing down the increases. Of course, that will depend on jobs and the growth of the economy.
Pending sales for new home sales were up 7.8 percent for October over last year. Prices continue to climb with a rise of 0.7 percent. Inventory of homes in the new construction category was up 8.4 percent.
While more new homes become available, it is still not adequate to meet the demand in price points below the $500,000 range. Since we reported last month, there is no change in regards to the tariffs on lumber driving up costs and the shortage of labor in the building trades.
Joe’s Crystal Ball
We continue to enjoy the positive job and economic numbers. Interest rates are the big question mark. We know they will continue to rise, but not how fast. As far as December goes, I give even odds as to the Fed staying the course or another increase. At this point, we don’t know what impact these rate hikes are going to have on the market next year.
What we do know is that we see more balance in the higher price categories. We have seen many homes take longer to sell, and more price reductions. Sellers are now having to face the reality that homes are not selling in record time at full price like they were last year. However, I still see a Twin Cities market that still has room for growth, although more slowly. Even with rising rates, homes are selling well. A great deal is going to hinge on the stock market, jobs, and the effects of the trade war.
This realistic optimist still sees a half-full glass and a healthy housing market moving closer and closer to balance. Balance is not a bad thing over the long range; it’s more of a favorable environment as a whole. The housing market still gets a smiling emoji from me.
Twin Cities Market data for October 2018 compared to October 2017
- new listings up +9.2%
- pending sales down -1.7%
- closed sales up +3.4%
- days on the market until closing was 48, down -7.7%
- inventory of homes for sale down -2.2%
- month’s supply of inventory flat at 2.4 months
- median sale price up +8.6% to $265,000
- original list price received up 0.2%
- the price range that saw the highest sales gain was the $250,001 to $350,000 up 11.4%
- property segment with the most significant price gain was townhomes up +9.0%
- new construction sales topped existing homes, up +7.8%
- the fastest selling price range was $190,001 to $250,000 at 35 days
Rolling 12 months from November 2017 through October 2018
- new listings down -1.1%
- pending sales down -3.8%
- closed sales down -3.5%
- overall median sales price up +7.7%
*source Minneapolis Area Association of Realtors