Home buyers outpaced sellers in the Twin Cities last month, boosting prices and depleting supply.
New data from the Minneapolis Area Association of Realtors showed Tuesday that buyers signed 4,331 purchase agreements during October throughout the 13-county metro area, 3.3 percent more than October 2014. At the same time there were only 5,798 new listings, 2.6 percent fewer than last year, causing the number of listings at the end of the month to fall 16.7 percent.
“Sellers are still a bit hesitant,” said Mike Hoffman, president of the Minneapolis Area Association of Realtors (MAAR). “That said, factors such as low interest rates, rising rents, prices still below their peak and accelerating job and wage growth also paint a compelling picture for buyers.”
That shortage of listings put sellers in the driver’s seat in some parts of the region. Those sellers fetched 96.2 percent of their asking price in just 70 days, a slight decline from last year at this time. The median price of those sales increased 4.9 percent to $218,000.
House sales typically slow during the fall and winter months as buyers think about hibernation and the upcoming holidays, but there have been more house hunters in the market compared with recent years and that’s keeping related businesses — from appraisers to mortgage brokers — busier than normal.
Matthew Brown, president of HomeSight Inspections, said a “bumper crop of inspections” this spring and summer enabled him to nearly double the size of his staff, including hiring two trainees who are learning the ropes in time for what Brown expects will be a particularly busy spring market.
Brown said that although he’s doing more inspections this year than last, he’s still able to keep up with demand. That wasn’t the case this summer when there was more work than he could handle. “We had to let go of so much business, it was driving me nuts,” he said.
Mark Andrada, senior residential loan sales manager for Associated Bank, is also seeing a strong market at a time when business normally cools. Mortgage applications increased about 40 percent at the bank from September to October, Andrada said.
Housing trends in the Twin Cities mirror those across the rest of the country. On Tuesday, the latest FNC Residential Price Index showed that U.S. house prices in September — the latest month that national data is available — gained 0.2 percent after an unexpected late-season increase in homes sales. Year-over-year, September prices were up 6.1 percent.
In a statement, Yanling Mayer, FNC’s housing economist and director of research, said it’s notable that price growth hasn’t been stronger considering how pervasive inventory shortages are across the country.
“On the demand side, slowing consumer spending in recent months, as well as weak inflation, is a telltale sign that there remains a great deal of economic uncertainty, which for the most part is holding back would-be home buyers,” Mayer said.
Despite favorable interest rates and more favorable borrowing conditions, there’s growing concern that the lack of inventory is putting the squeeze on sales. At the current sales pace, there are only enough house listings in the metro to last 3.2 months — just shy of all-time low, making many would-be buyers delay the house hunt.
Doug Winter, regional sales manager for Wintrust Mortgage, said that while the mortgage business has been “spotty” throughout the state, mortgage originations so far this month are up 14.8 percent from October and he’s had to hire a few more loan officers. Still, the company isn’t breaking any records.
“Inventory of homes appear to be low,” he said. “On the good side, this year we have seen our average loan size increase due to more new construction buyers and more jumbo [mortgage] buyers.”