Jul 19, 2022 - Real Estate

Pending sales drop as Twin Cities housing market cools

<b style='color: #8a0098'>New listings</b> and <b style='color: #00ab58'>pending sales</b> of Twin Cities-area homes
Data: Redfin; Chart: Kavya Beheraj/Axios

House hunters can finally breathe a little.

What's happening: The blistering Twin Cities housing market of the past two years is starting to cool.

  • Pending sales over the past three week are down 23% compared with the same time period last year, per new data from the Minneapolis and Saint Paul Area Association of Realtors.
  • There are now 12% more homes on the market than a year ago.
  • More sellers are dropping their asking price. Nearly 40% of homes on the market in June had dropped their price. A year ago only 30% had dropped their price, according to Redfin.

But, but but: The market is still very much tilted toward sellers.

  • The median sales price for a Twin Cities home hit $380,000 in June — up from $375,000 a month ago and up 8.6% from a year ago.
  • Plus, the amount of homes on the market remains very low compared to historical trends.
  • An expert with the Minneapolis Fed told Axios last month that she doesn't expect more than a slight dip in home prices in the Twin Cities.

Between the lines: The largest factor for the cooling market is that rising interest rates have made it more expensive to buy a house.

  • Rates for a 30-year-fixed mortgage jumped from below 3% last summer to 5.81% in late June, though they dipped to 5.51 last week, according to Freddie Mac.

What they're saying: “While buyers should know that mortgage rates are still well below their long-term average, the increase in rates has had a real impact,” said Denise Mazone, president of Minneapolis Area Realtors. “Today’s buyers are more sensitive to that.”

What we’re watching: New listings and pending sales. If more listings flood the market this summer and buyers don’t bite, that’s when we would start to see more power shift into buyers' hands.


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