Timid sellers are making for a tepid spring for Twin Cities home sales.
During February, the traditional start of the spring homebuying season, there were 2,635 house closings, 6 percent fewer than last year at the same time.
Sales didn’t fall for a lack of demand. The problem was a dearth of options.
During the month, there were 5,072 new listings, 8 percent fewer than a year ago and the fourth consecutive month of decline. That helped deplete the property pool, with the number of overall listings down 23 percent from a year ago and at a 15-year low.
“Inventory limitations and higher prices meant we couldn’t quite stretch beyond last year’s near-record numbers,” said Kath Hammerseng, president of the Minneapolis Area Association of Realtors (MAAR).
By just about every other measure, the market was on fire. At the current sales pace, there were only enough houses on the market to last 1.5 months. And house prices have been on a steady upward trajectory for the past several years, further limiting options for buyers who are getting priced out of the market.
The median price of all closings last month was $250,000, a record high for February and nearly 13 percent higher than a year ago.
On a square-footage basis, which eliminates the statistical noise that occurs when the size, age and condition of houses changes, prices increased 8.2 percent to $145 per square foot.
Separately, CoreLogic said Friday that homeowners in the Twin Cities had one of the lowest negative home-equity rates in almost a decade. After peaking at 21.7 percent during the fourth quarter of 2011, the negative-equity rate is now 3.2 percent.
For buyers, those gains have been accompanied by rising mortgage interest rates, which are still relatively low by historical standards, but on the rise. The average rate for a 30-year fixed-rate mortgage was in the low to mid 4-percent range in recent weeks, up from about 4 percent a year ago.
Because the market is so competitive, sellers are commanding strong offers and sometimes getting more than one. The average seller received 98 percent of the original asking price compared with 96.5 percent last year.
“What we really need is for more homes to hit the market,” said Todd Urbanski, MAAR’s president-elect. “The total number of homes sold will remain flat this quarter due to the overall inventory shortage.”