A record-low inventory is starting to impact home sales in the Twin Cities metro area at a time when buyers are eager to find a new house.
“We’re seeing lots of factors at play right now,” Todd Walker, President of Minneapolis Area Realtors said in a statement. “Buyers are running up against the inventory shortage even as they’re inspired by 50-year low mortgage rates. We’re seeing shifting attitudes around urban living and condos. People are also very encouraged by the progress on the vaccination front.”
New data from the Minneapolis Area Realtors and St. Paul Area Association of Realtors show sales activity in the 16-county metro continues to be above 2020 levels. Closed sales rose 4.8% in February 2021 compared to February 2020, which is the highest figure since at least 2003, a news release says.
Meanwhile, signed purchase agreements have leveled off. While they're the strongest since 2005, they were down 0.1% from last year, which suggests a low supply of properties could be constraining sales, the release notes.
In fact, the number of homes on the market is at a 20-year low. Sellers listed 12.6% fewer properties in February 2021 compared to February 2020 and the number of homes for sale in February was down 46.3% compared to a year ago (that's 0.8 months of supply, while a balanced market has 4-6 months of supply).
Sellers, though, are benefiting from "historically strong" offers, with homes selling at 100.1% of the list price and often receiving multiple offers. Homes are selling in record time, too — half the listings in February sold in fewer than 19.5 days.
“With so many buyers vying over a shrinking pool of listings, well-priced and well-staged homes don’t spend much time on the market,” said Tracy Baglio, President of the Saint Paul Area Association of Realtors. “That means buyers have to come out swinging right out of the gate with their best offer in order to be successful.”
While pending sales were down 0.1% across the 16-county metro, they were up 23.3% in Minneapolis and 8.4% in St. Paul. This indicates that there's still buyer interest in the "urban core."
Meanwhile, after lagging in sales in 2020, condos saw the strongest demand growth in both pending and closed sales in February.
New construction sales rose 32.5% compared to a 2.6% increase for previously owned homes. And sales of luxury properties (those priced at $1 million and up) have also been strong, up 53.1% from last February.