Statewide home sales got a boost last month from buyers of second homes and lakeshore properties in the most remote corners of the state.
The Minnesota Association of Realtors said Monday that sales jumped 4.5 percent from last year to 8,125, the highest level since 2010. Home prices also increased nearly 14 percent to $185,500.
“Thankfully, sellers won’t have to wait very long to sell their home,” said Jim Cormier, president of the Minnesota Association of Realtors, speaking about the 20 percent decline in June in the average time homes were on the market.
The Arrowhead region posted the best results statewide with a nearly 30 percent increase in sales. The seven-county region includes communities in the Iron Range and along the North Shore of Lake Superior that are popular with second-home buyers, especially in Cook and Lake Counties along Lake Superior.
Angelo Poaletti, broker-owner of Vermilion Land Office Inc. and president of the Range Association of Realtors, said the spring market was delayed in this part of the state because of the late thaw, pushing back deals that would have closed in April and May.
“There was a lot of anxiety because of the late summer and long winter,” he said. “We had people canceling showings because we just couldn’t get out.”
In the Twin Cities metro, sales were up 7.8 percent, with the median price rising more than 18 percent to $210,000.
The state report was released the same day as nationwide home sales, which were up 15.2 percent over last year, but down 1.2 percent from one month ago to a seasonally adjusted annual rate of 5.08 million. Still, the year-over-year increase was hailed as a positive sign.
“Affordability conditions remain favorable in most of the country, and we’re still dealing with a large pent-up demand,” said Lawrence Yun, chief economist for the National Association of Realtors.
Yun and other housing experts said that while recent increases in mortgage interest rates are cutting into housing affordability, higher rates have yet to dampen the recovery. Pending sales, a harbinger of future closings, have been on the rise in Minnesota and beyond. Statewide, signed purchase agreements were up 8.3 percent last month.
The state report tracks sales for 13 economic development regions. A quarter of those areas saw sales decline compared with last year. However, the total number of sales for some of those regions is small.
The Upper Minnesota Valley region, a five-county area along the Minnesota-South Dakota border, also did well. That region has had the strongest gains so far this year, with sales up 19.2 percent last month. Many of the sales in that region are being driven by a booming market for productive agricultural land.
Throughout the nation, would-be sellers are being motivated by higher prices. In Minnesota, for example, there were 12,129 new listings last month — a 16 percent increase over last year. Demand in some areas continues to outstrip new supply, causing the overall inventory to fall near 4 percent.
That scarcity of listings, especially in the state’s most remote regions, and the threat of higher mortgage rates are expected to keep prices on the rise in 2013, Paoletti said.
“If our economy continues its current trend, it looks as though most price categories of lakeshore will maybe increase at a rate of maybe 4 to 5 percent per year beginning maybe next year once the inventory has returned to normal,” he said.