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Prices up, home sales down as local market continues to shift

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Higher mortgage rates lose some of the Twin Cities home market bubble, but in some areas there are more buyers than sellers and home prices are still rising steadily.

According to a monthly report from a Minneapolis area realtor, buyers signed a purchase agreement of 5,544 during June. This is 18.4% less than the same month last year, the lowest in June since 2014. Closing also decreased from last year, but increased slightly compared to 2020.

The median of these sales rose nearly 9% to a record $ 380,000.

“people [buyers] “I’m a little more relaxed,” said Carla Ferrell, a longtime real estate agent at Twin Cities. “The sense of urgency has receded a bit.”

On Saturday, Ferrell hosted an open house for $ 439,900 at the Plymouth house she listed a few days ago. More than half a dozen prospects have toured the house, but she hasn’t received an offer yet. She expects one by the weekend.

She said buyers now have a little more time to ponder their purchases, as higher mortgage rates ease demand.

“It’s moving rapidly into a more normal market,” she said. “But it’s still a seller’s market rather than a buyer’s market.”

Open houses, which are much more common than just a few months ago when many homes were sold within hours, are just one of many signs that the home market is changing. Selling a home takes a little longer, and buyers are much more likely to offer price cuts than they were just a few months ago.

The rebalancing is happening as mortgage rates and rising home prices undermine affordability.

Last Thursday, Freddie Mac said the 30-year fixed-rate mortgage (FRM) averaged 5.51% and 0.8 points, according to a weekly interest rate survey. This is an average of 5.30% last week, up from 2.88% a year ago.

Freddie Mac chief economist Sam Carter said in a statement, “Affordability remains affordable as interest rates are the highest in the last decade, home prices are skyrocketing and inflation continues to affect consumers. It is a major obstacle for many Americans to own a home. “

Rising interest rates and record high home prices have caused the Twin Cities home price index to fall to at least its lowest level since 2004 in June.

As another indicator of market change, buyers have more options than last year. As of the end of June, there were 8,020 homes sold in the metro, an increase of nearly 10% from last year, and a year-on-year increase for the second straight month. The profit came despite a slight increase in new listings compared to last year.

Still, at the current sales pace, there were only enough lists on the market to last 1.6 months. This is a 23% increase compared to last year, but well below the 4-6 month supply on the list needed for the market to be considered balanced between buyers and sellers.

“It’s encouraging to see more homes on the market after years of supply in less than two months,” said Mark Mason, chairman of the St. Paul’s Regional Real Estate Association. “But profits came primarily from a small number of buyers rather than sellers, so more supply and more construction activity is needed to balance the market.”

On average, homes sold in 21 days, a slight increase over last year.

The same trend is happening throughout the state. June closing prices fell nearly 14% year-on-year and inventories increased 8.2%, according to the Minnesota Realtors. The median closing for all states was $ 345,000, 6.2% higher than last year.

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