Rock-bottom mortgage rates helped boost year-over-year sales for the 11th month in a row. The median sale price rose 9.9 percent.
Record-low mortgage rates and increased optimism about the economy in some parts of the state gave Minnesota home sales a healthy bump in May.
The Minnesota Association of Realtors, which tracks activity for 11 economic regions, said sales were up 11.2 percent from last year to 8,446. The median sale price of those deals increased 9.9 percent to $150,000.
Agents attribute higher prices to an increase in move-up houses, a decline in distressed sales and a general shortage of listings.
Monthly year-over-year sales have increased for 11 months, with most of those gains coming in parts of the state where there's been meaningful job growth, including Duluth.
"We have a lot of good economic news coming into the region, so that's helping with the confidence level," said Gary Kalligher, broker at Re/Max 1 in Duluth. "People know their job is secure, or at least that there's a good prospect of new jobs."
Several companies have promised to bring new jobs to the Duluth market, including AAR Craft Services, which is taking over a former Northwest Airlines facility. Closings in the Arrowhead region, which includes Duluth, were up 22 percent, and prices rose 4.8 percent largely because of an increase in houses priced at more than $170,000, Kalligher said.
"Everything seems to be falling into place here," he said.
That includes record low mortgage rates. On Thursday, Freddie Mac said rates fell to new lows, with the 30-year fixed averaging 3.66 percent with 0.7 points. Rates have been falling incrementally but steadily during the busiest selling season of the year.
National data mirrored Minnesota's results. The National Association of Realtors said existing home sales during May were up nearly 10 percent compared with last year but had fallen slightly from April to a seasonally adjusted annual rate of 4.55 million in May.
Most of the 11 regions tracked by the association posted both gains in sales and prices, but there were huge variations of the number of transactions that happened in those regions. For example, in the extreme southwest corner of the state there were 109 sales with a price decline of 25 percent. In the seven-county metro there were 4,111 sales with a 23 percent increase in median price of those sales.
The report shows that rate of recovery in the state's housing markets varies dramatically even as the number of listings continues to fall. Statewide, new listings were down 7.7 percent, resulting in multiple offers in parts of the state where demand has been the strongest. That was true in the Rochester area, Duluth and the Twin Cities.
Herb Tousley, director of the real estate program at the University of St. Thomas, said that while inventory declines can be positive because they create upward pressure, it's a tough time to be a seller.
"People can't sell because they owe more than their home is worth, while others don't want to sell into a market where prices are so low."
He said that the supply of traditional listings is particularly tight, especially for first-time buyers. A University of St. Thomas House Price Report Index released this week said that in the Twin Cities and beyond there was a 3.1-month supply of traditional, nondistressed homes for sale priced at less than $170,000.
"Homes on the market that are priced right are selling much faster," Tousley said.
Jim Buchta 612-673-7376