It's not a seller's housing market in Twin Cities

The traditional spring selling season in the Twin Cities-area real estate market is warming up about as rapidly as the weather.

Pending sales -- signed purchase agreements -- were down 14.6 percent in March compared with March 2007. Meanwhile, closed sales were down 12.1 percent year over year and down 32 percent from March 2006.

But the number of new homes hitting the market is falling, too, helping to keep the glut of properties for sale from growing.

According to the Minneapolis Area Association of Realtors, there were 8,523 new listings last month, 17 percent fewer than March 2007 and 21 percent fewer than in March 2006. New listings for the first three months were down 8.7 percent from 2007. New home construction was down 24.2 percent.

The association called the March numbers "a tepid spring showing."

Despite relatively low interest rates and the falloff in new listings, the road to real estate recovery in the Twin Cities remains formidable, industry officials said.

"We shouldn't mistake flat supply as a sign that the tide has already turned," said Steve Havig, a broker with Lakes Area Realty.

The drop in new listings is considered more a sign that some owners are waiting for better selling conditions than an indication that the market is approaching equilibrium.

The average time it takes to sell a home in this market continues to rise. The current volume of inventory is a 9.6-month supply, compared with six months in 2007 and slightly more than four months in 2006.

The market is considered balanced when there is a five-month supply of homes.

Although March's median sale price rose to $200,000, up slightly from February, it's still nearly 10 percent below the level of a year ago. And the percentage of owners receiving their original asking price continues to decline, from 95.6 percent a year ago to 91 percent last month.

Kevin Knudsen, a Coldwell Banker Burnet broker and president of the Minneapolis-area association, said that the growth in houses for sale priced at $150,000 or less has been a drag on the market.

"In the last year we've seen a 60 percent increase in homes for $150,000 or less. As those go through the market we'll start seeing an increase in the median," Knudsen said.

Still, soft home prices and low interest rates combine to make the median-price home more affordable to buyers.

According to the association's "Housing Affordability Index," the area's median income is 155 percent of what is necessary to qualify for a median-priced home with 20 percent down and a 30-year fixed mortgage. That's 10.9 percent greater than a year ago.

Knudsen, who manages an office of 85 agents, compared a week's worth of private showings in March to the same week a year ago. The number of showings for that week in 2007 was 170; the number this year was 224.

"If buyer activity is increasing, we should see numbers improving," Knudsen said.