Buckle up, home buyers, it's going to be a bumpy year.

A pronounced imbalance between buyers and sellers in the Twin Cities metro last month suggests it will be an especially competitive spring market across the metro.

During January, new listings declined nearly 9% as buyers signed 3,519 purchase agreements, 5.6% more than during the same period last year, making it the busiest January in at least 15 years, according to a monthly report from the Minneapolis Area Realtors (MAR) and the St. Paul Area Association of Realtors (SPAAR).

Closings, which represent deals signed two to three months ago, were unseasonably strong, increasing nearly 15%. With new listings down and buyer demand on the rise most buyers paid full price or more, causing the median price of those closings to increase 11.5% to $301,000.

"Last year was incredibly strong and so far 2021 is keeping up the pace," said Todd Walker, MAR's president, in a statement. "Rates are as attractive as they've ever been and the demand is persistent, but the challenge is still the lack of supply."

Sales gains were strong in nearly every corner of the metro, including the downtown condo market, which was one of the few urban submarkets that saw a noticeable slowdown last year.

During January, there were 64 condo closings in Minneapolis and a 9.3% annual increase in pending sales compared with a 12.4% increase across the metro.

"It could be premature to say the condo market has shrugged off all recent challenges and is fully recovering, but it's encouraging and reassuring to see sales start to rise again," said David Arbit, MAR's director of research. "December and January both saw year-over-year gains in [pending] condo sales."

Sales agent Betsy Lucas said there's been a noticeable shift in the downtown market. She recently sold a downtown townhouse in the North Loop neighborhood for $1.65 million after it had been on the market for a little more than three months and one price reduction. The buyers moved from a second-tier suburb.

"They were shopping for a while and contemplating a move downtown," she said. "As empty-nesters they wanted enough space for grown kids to come home, but thinking about their lifestyle as empty-nesters who want to walk to theaters and restaurants."

She said the vaccine rollout seems to be giving prospective buyers more confidence that life in the city might soon return to normal.

"The vaccine is getting people to think ahead," she said. "It has helped contribute to more market activity."

She said the majority of the pending sales in downtown neighborhoods are condos priced at less than $500,000, an indication that low mortgage rates are drawing renters into homeownership because in some cases it's less expensive than renting.

In Minneapolis, there was a double-digit annual increase in new listings during January, but an even bigger nearly 40% increase in pending sales. The trend was similar in St. Paul.

Across the metro there were 42.6% fewer properties for sale at the end of January compared with last year. At the current sales pace that means there are enough listings to last less than a month. The market is considered balanced when there's a four- to six-month supply of listings.

"There are many motivated buyers out there, but not nearly enough homes for them on the market," said Tracy Baglio, president of the St. Paul Area Association of Realtors. "Proper pricing is still critical, but sellers are accepting offers that are at or very close to list price, occasionally above it in the first-time buyer segments."

Jim Buchta • 612-673-7376