Bargain hunters took advantage of good deals on distressed properties and lower mortgage rates in April, pushing Twin Cities home sales up sharply from a year ago.
Pending sales -- those with signed purchase agreements -- rose to 5,211 last month, up 23.8 percent from a year ago, according to data released Tuesday by Twin Cities-area Realtor associations. But the increase was entirely because of foreclosures and other distressed sales that dragged the median sale price down 25 percent, to $153,000.
"What's driving this is that the banks do not want to hold on to that inventory, so they are aggressively pricing so they will move off the shelf so they can take it off their books," said Steve Havig, president of the Minneapolis Area Association of Realtors and owner of Lakes Area Realty in Minneapolis.
Part of the bump can be chalked up to the traditional selling season, said Scott Anderson, a senior economist with the Minneapolis office of Wells Fargo & Co. But he said the signs are there for the early stages of the bottom of the housing market.
"Sales are increasing, inventories are coming down," he said. "These are all good signs that we'll start to see some stability in pricing."
The number of pending sales that were lender-mediated -- foreclosures and "short sales" where the lender agrees to a sale for less than the mortgage amount -- nearly doubled from a year ago, while traditional sales actually fell.
"In general, people are not purchasing traditional properties" because of the economy, said Jeff Allen, research manager with the Realtors association. "People are snatching up the cheaper properties."
But in what could be a positive sign, distressed sales as a percentage of all sales in the 13-county metro area have dropped over the past few months, from recent highs of about 60 percent of all pending sales in January and February to 46 percent in April.
"That's the right direction, but it's a little too early to tell" if it means anything, said Anderson. "Those numbers bounce around a lot, month to month. I'd like to see a trend before saying we're working through those" distressed properties.
In addition to fire-sale prices, buyers are also taking advantage of low mortgage rates and an $8,000 tax credit for first-time buyers that's part of the stimulus package. The report said 30-year mortgage rates are holding steady "at extremely attractive levels" of an average of 5.4 percent, down from 6.4 percent a year ago.
But the low prices that smooth the way for first-time buyers are driving down the median sale price. The median price is the midpoint, meaning that half of the homes sold for more and half for less.
The median sale price for lender-mediated homes in the Twin Cities was $120,000 in April, down 21.5 percent from a year ago. Excluding those sales, the median sale price was $205,000, down 8.5 percent.
"The very, very advantageous prices ... are driving the median prices," said Havig. He expects that much of the distressed inventory will be moved by the end of the year.
Once clear of it, he said, "we will move into a normal, stabilized traditional market."
A national report also out Tuesday said Minnesota was one of six states that saw first-quarter home sales rise as buyers snapped up foreclosed homes at deep discounts. The other five were Nevada, California, Arizona, Florida and Virginia. Sales more than doubled in Nevada, rose 81 percent in California and grew 50 percent in Arizona -- signaling that the worst may be over for those distressed states, the National Association of Realtors said.
Still, the median sale price nationwide was $169,000, down 13.8 percent from a year ago.
The Twin Cities report also said:
• The number of new listings dropped 14.6 percent from this time last year.
• Active listings dropped 18.4 percent to about 26,420.
• The percent of the original list price received at the sale dropped slightly to 90 percent.
The Associated Press contributed to this report. Suzanne Ziegler • 612-673-1707