Home prices in the Twin Cities last month marked their first annual decline in more than a decade, but with house listings also on the decline, sellers still nabbed their asking price or more.
During April, the median price of all closings was $367,500, a nearly 4% increase from the previous month but a 0.7% decline compared with last year, according to a monthly report from the Minneapolis Area Realtors.
"Homeowners sometimes panic when prices soften while buyers often rejoice," said Jerry Moscowitz, president of Minneapolis Area Realtors, in a statement. "But it's important to remember that it simply reflects the cross-section of homes selling and doesn't necessarily affect your home's value."
During April, sellers listed 5,170 properties, nearly 30% fewer than last year. That caused the total number of homes for sale to post a 4.5% annual decline.
Listings are down because many people don't want to swap a low mortgage rate for a higher one. Mortgage rates have declined slightly in recent weeks but remain elevated compared with last year. Last Thursday, Freddie Mac said the 30-year fixed-rate slipped to on average 6.35%. A year ago, the 30-year averaged 5.3%.
With far fewer new houses hitting the market than last year, buyers are acting fast. On average, houses sold in 45 days, more than twice as slow as last year but far quicker than normal.
At the current sale pace, there were enough houses for sale to last 1.5 months. The market is considered evenly balanced between buyers and sellers where there's a four- to six-month supply of listings.
Statewide, the trends were similar. Pending sales were down 29%, and new listings were down nearly as much, according to a separate report the Minnesota Realtors released. That report, which includes every region of the state, showed the median price of all closings during the month was $335,000, a 1.5% decline from last year.
At the end of month, the total number of listings still on the market was up only 1%, slightly less than the metro average, according to the state association. The biggest decline in closings was in the Arrowhead region, where sales were down 43% compared to last year. Closings were down the least in the middle of the state in the North Central region, which saw a decline of just 21%.
Higher mortgage rates coupled with record home prices have put many would-be buyers on the sideline. That's especially true for first-time buyers and people who want to downsize into a smaller, less-expensive house.
Starter houses, those priced from $190,000 to $350,000, have been especially scarce in the Twin Cities. Last month, properties in that price range were the most difficult to find, posting the biggest year-over-year decline. Sellers of those properties also garnered the strongest offers, fetching them on average nearly 101% of their asking price.
"I wasn't finding anything in my price range," said Celeste Sawyers, a firefighter and single mom who wanted to buy a house in St. Paul for under $200,000.
After looking seriously since the beginning of the year, another buyer outbid her on a three-bedroom house that fit her needs perfectly. She offered $10,000 more than the $199,900 asking price, but there were several other offers, and the sellers didn't pick hers.
"She loved that home, and it was heartbreaking to tell her that someone else outbid her," said her agent, Freddy Jara.
Jara said he told the listing agent the house was perfect for his client and to let him know if anything changed. A couple of weeks later, the listing agent called to say the buyer backed out, and the seller would now accept Sawyers' offer.
"I could not believe it," he said. "I told Celeste, 'The universe is aligning perfectly for you.'"
Sawyers qualified for a $40,000 downpayment grant, enabling her to buy the house and pay only slightly more than she was paying for rent. She closed on April 28.
"I really do the love house," Sawyers said. "Even more so now that I'm in it."
