Twin Cities home sales tick up as mortgage rates dip
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Falling mortgage rates have led to a small increase in home sales, but the Twin Cities market is still slow.
Why it matters: Homebuyers — especially first-timers — finally got a long-awaited interest rate reprieve, but a slowing labor market has kept many on the sidelines.
By the numbers: The 30-year fixed rate fell from around 6.9% in May to 6.2% in September, though rates have since inched up to 6.34%, per Freddie Mac data.
- September numbers from Minnesota Realtors won't be out for a couple more weeks, but weekly pending sales for the first three weeks of the month were up 6.5%, 5.2% and 9.7% compared with the prior year.
Zoom in: The Twin Cities is bucking trends seen in some coastal markets, where home prices are falling. Here, they continue to grow, albeit slowly.
Between the lines: Minnesota has seen a 1.3% increase in net job creation this year, outpacing national growth of 0.8%, according to the Minnesota Department of Employment and Economic Development.
Yes, but: Frank D'Angelo, president of Minneapolis Area Realtors, told MinnPost that the recent government shutdown, trade wars, partisan gridlock, and the politicization of economic data have hurt consumer confidence, leading to an overall weak year for sales.
What they're saying: Kris Lindahl, CEO of Kris Lindahl Real Estate, recently wrote a LinkedIn post raising concern that a crash in the housing market could be coming, citing a lack of wage growth, depletion of personal savings, rising debt and job uncertainty.
- He told Axios he's seen a surge in local purchase agreement cancellations or expirations this year, a sign that buyers are backing out of deals or making major requests of sellers, who then back out.
- Lindahl said he's also seeing sellers who are now upside down on their homes, with many of them having done cash-out refinances.
Reality check: The Minnesota Realtors report says short sales and foreclosures remain at a very low rate.
- They've been below 2% of total sales since 2019. For some perspective, short sales and foreclosures topped 40% of sales following the 2008 financial crisis.
What we're watching: Whether market corrections in Florida, Texas and Arizona spread to the Twin Cities.