Compared with the frenetic record-setting pace during the last half of 2020, the housing market in the Twin Cities this fall is starting to look a bit more normal. Just a little.
Last month there were just 5,590 pending home sales in the Twin Cities metro, 14% fewer than the year before, according to a joint monthly sales report released Monday from the Minneapolis Area Realtors (MAR) and the St. Paul Area Association of Realtors.
There weren't as many sellers, either. At the end of the month there were nearly 16% fewer houses for sale compared with last year.
"It is slowing, but it's nowhere near a balanced market," said Brenda Tushaus, chief executive at Eden Prairie-based Re/Max Results. "People are starting to feel that seasonal adjustment we normally feel at this time of year."
Real estate agents say the COVID-19 pandemic pushed the 2020 spring buying season into the last half of the year, blurring all normal year-over-year comparisons. Still, by virtually every measure, this fall has been one of the strongest seller's markets of the past decade.
Though there were fewer house closings compared with last year, there were more buyers than sellers in some parts of the metro last month, triggering multiple offers that helped boost the median sale to $341,750 — more than 10% higher than last year, according to the new report.
Houses also sold more quickly and for a higher price than in previous years. On average, houses sold in just 23 days
"We are still in a period where year-over-year comparisons can be skewed," said MAR President Todd Walker. "We've gone from Mach 3 to Mach 1. Still a fast pace, but agents are seeing fewer multiple offers."
At the current pace there are only enough listings on the market to last 1.5 months, the lowest figure for any September going back two decades. Historically, the market is considered balanced between buyers and sellers when there's a five- to six-months supply of listings.
The decline in sales has in part been triggered by a decline in house listings. Last month there were just 7,238 new listings, a nearly 9% decline compared with last year.
Despite the decline in pending sales, home sales in the Twin Cities are still on pace to beat last year by a sizable margin. From January through September, closings were up more than 6% compared with last year but the total number of new listings are on par with 2020.
Also on Tuesday, Zillow's monthly market report showed that the U.S. market is becoming less competitive. It said that during September the share of listings with a price cut was 16%, compared with nearly 14 % in August.
The online real estate website said that nationwide September marked the fourth-fastest monthly pace of appreciation and a record pace of yearly appreciation dating back to 2000. The typical U.S. home was worth 18.4% more in September 2021 than it was in September 2020, surpassing August's then-record of 17.5% year-over-year appreciation. Annual appreciation was in the double digits across all 50 major markets, including the Twin Cities.
Those price gains have been driven in part by mortgage rates that have hovered near record lows since late last year. Rates have increased slightly in recent weeks, however. Last Thursday, Freddie Mac's weekly mortgage rate sampler showed that the 30-year fixed-rate mortgage (FRM) averaged 3.05%, the highest since April.
Tushaus expects the market in the Twin Cities to become less competitive and price gains to moderate in the coming year.
Already multiple offers are slightly less common this fall and price reductions are more frequent, she said. This is happening despite a persistent house-listing logjam caused by potential sellers who are leery of listing their homes when it might be difficult to purchase a home to replace it.
"At this time last year the market was just gangbusters; it was like a delayed spring market," she said. "We're back to normal seasonal cycles."