Rising mortgage rates and balmy weather kept home buyers shopping in the Twin Cities last month, leading to deals at a pace usually seen in summer.
And December appears to be shaping up as nearly as busy, real estate agents and market watchers said Wednesday.
“Title companies and agents are busy with closings all the way to the end of the year,” said Jason Stockwell, an agent with ReMax Results.
In November, the number of pending home sales in the Twin Cities rose 9 percent to 3,780, the highest level for any November since 2004, the Minneapolis Area Association of Realtors reported in its monthly data announcement.
Closings increased a remarkable 25 percent to 4,260, the largest year-over-year increase since February 2012.
“Strong buyer demand is still driving this market in a great big way,” said Judy Shields, the association’s president.
Sellers weren’t as active. Only 3,743 new listings hit the market last month, 1.1 percent fewer than last November.
At the current sales pace, there are only enough listings to last 2.1 months, a 27 percent decline in inventory from a year ago and the lowest figure on record for any month since 2003. Generally, a five- to six-month supply of listings is considered balanced.
On average, the amount of time it took to sell a house involved in a transaction last month was 61 days, 12 days faster than last year at this time. And sellers received 99.4 percent of their most recent list price.
With houses selling in near-record time and buyers outbidding one another in some neighborhoods, the median price of all closings during the month was $232,000, up 5.8 percent from November 2015.
“Buyers are feeling the pressure to some degree but still remain sensible,” said Cotty Lowry, president-elect of the association.
The report came on the same day the Federal Reserve’s policy committee authorized a quarter-point increase to the federal funds rate, an influencer of interest rates at banks and other lenders. The Fed signaled that up to three more rate hikes are possible next year.
Mortgage rates already have started to move higher, however, driven chiefly by a jump in rates for 10-year Treasuries, which have been influenced by the election outcome and the perception that the Trump administration will boost government spending and debt. After spending most of the year near-record lows of about 3½ percent, the average 30-year fixed-rate mortgage has risen to slightly more than 4 percent since the election.
Demand for houses isn’t uniform in the Twin Cities. Generally, demand has been strongest in the lowest price range.
However, in November houses priced from $350,000 to $500,000 posted the biggest gain in year-over-year sales. Houses in Minneapolis and St. Paul and in the inner-ring suburbs also sold the quickest and for the highest percentage of list price.
Although the vast majority of the sales were single-family houses, townhouses also posted their biggest year-over-year sales increase during November.
At a small subdivision in Roseville called Garden Station, Stockwell of ReMax Results said that buyer activity has been much better than normal for this time of year. On a recent Saturday, four groups toured the model unit and two of them expressed strong interest in buying, but aren’t quite ready to pull the trigger because they have homes they need to sell first.
“That’s better than we expected,” he said, noting that many agents aren’t taking their normal holiday break.
The 18-unit project, which is being developed by the Greater Metropolitan Housing Corp., has one-level townhouses that range from 1,660 to 3,300 square feet and are priced at $350,000 and up. Stockwell said that most prospective buyers were older adults looking for an open floor plan and single-level living.
Higher mortgage rates are starting to affect buyers. For example, a buyer who qualified for a $250,000 purchase before Election Day would now have to shop for a $210,000 house for a comparable mortgage payment.
“Investor activity is stronger and just as active as it has been in the summer,” Stockwell said.