Twin Cities Housing Review February 2019
Minneapolis-St Paul Housing Overview
As we move ever closer to spring, it looks like the prime season for housing is going to be hot. Buyers in the lower pricing tiers are currently getting a sneak peek in the challenges they will face in their quest to become homeowners.
When we compare new listings for February 2018 to this past month, we see a decrease of 14% which is not good news for buyers. However, I would be remiss not to point out that weatherwise, February was a month characterized by lots of snowfall and bitter cold, which tends to put a damper on real estate activity.
What’s Rising and What’s Falling
As we compare February of this year to 2018, we see that closed sales were up 4.0 percent, the percentage of list price received down 0.3, and the median sale price of $265,500 up 6.2 percent. Meanwhile, pending sales, the predictor of upcoming closed sales was down 7.4 percent.
The February Supply Story
We find new listings in February were down 14.3 percent from last year, and inventory levels were lower by 5.9 percent putting the month's supply at 1.6. Days spent on the market were flat.
The condo segment was the property type that saw the most price gains with a 10 percent increase — homes priced between $190,001 and $250,000 sold the fastest at 34 days. The townhome segment was the top gainer inventory wise with a 0.8 increase.
The Economic Factors
Our economy continues to make us smile. Although the Minnesota unemployment rate for January ticked up slightly to 3.0 percent, still considerably less than the national average of 4.0. Confidence among consumers is holding steady; home prices are still gaining traction and mortgage rates are holding at around 4.375 percent.
On the subject of interest rates, the outstanding news is that the Federal Reserve is planning not to raise interest rates for the remainder of the year. Even given that fact, however, low inventory levels are putting the squeeze on buyers and forcing home prices every higher. Affordability continues to be a genuine concern.
New Construction in the Twin Cities
Pending sales of newly constructed homes gained 6.3 percent for February compared to last year. The median sales price enjoyed a moderate increase of 1.3 percent while the Inventory of homes was up 6.8 percent.
New construction is still not meeting buyer demand, especially at affordable price points. The reasons remain the same as we have been reporting for many months now. Labor shortages persist in slowing housing starts while tariffs and local and state regulations make it difficult to build lower-priced homes.
I stand firm in my belief that 2019 will continue the trend of robust home sales. The lower interest rates will offset the higher sale prices of homes. So far, younger buyers continue to pursue the dream of homeownership with enthusiasm, and that inspires my optimism. If we continue to experience low unemployment and a stable economy in “the Twins” I’ll continue to raise my glass to the Minneapolis-St. Paul housing market future!
Twins Housing Data Feb. 2019 compared to Feb. 2018
- new listings down -14.3%
- pending sales down -7.4%
- closed sales up +4.0%
- days on the market until closing flat
- inventory of homes for sale down -5.7%
- month’s supply of inventory down -5.9%
- median sale price up +6.2% to $265,500
- original list price received down -0.3%
- the price segment with the most gains was the $350,001 to $500,000 up 10.2%
- most significant price gain for housing type was condos up +10.0%
- new construction sales topped existing homes, up +6.3%
- Homes priced from $190,001 to $250,000 sold fastest at 34 days
12 Months Rolling Stats from March 2018 to Feb 2019
- new listings down -0.4%
- pending sales down -2.1%
- closed sales up + 0.2%
- overall median sales price up +6.3%
As always, thanks for reading.