After a breathless 2017, there's not much to celebrate in the new year for Twin Cities home buyers.
During January there were only 4,041 new listings, 7.8 percent fewer than last year, leaving would-be buyers stuck on the sidelines and stifling sales in broad swaths of the Twin Cities and inner-ring suburbs.
"It sounds like a broken record, but more inventory is direly needed to prevent excessive price appreciation and provide more options for buyers across the price spectrum," said Todd Urbanski, president-elect of the Minneapolis Area Association of Realtors (MAAR).
During the month there were just 2,758 closings, 4.4 percent fewer than last year. Pending sales, an indication of future closings, were down nearly as much. By the end of the month there were only 6,875 houses on the market, 26.3 percent fewer than last year and the fewest in at least 15 years.
The deepening imbalance between buyers and sellers in some markets put upward pressure on prices, meaning buyers didn't dawdle, nor did they bargain.
On average, houses sold in just 69 days, 13.8 percent faster than average and a 12-year low, and sellers got 97 percent of their asking price, slightly more than they did last year at this time. A combination of strong offers and an increase in upper-bracket sales helped boost the median price of all sales during the month nearly 10 percent to $243,750, a record high for January.
Though prices posted a big gain, Kath Hammerseng, president of the MAAR, said that it's natural to wonder whether unusually cold weather dimmed sales.
"It was a cold month," she said. "But we are a hardy people, and we can already feel the spring market heating up."
The decline in sales comes at a time of growing concern that record sales prices are a harbinger of a price bubble to come, creating mixed messages for buyers and sellers. Experts say that in the new year, mortgage rates are expected to increase slightly and housing construction to rise, creating some relief for buyers.
In the Twin Cities there was a near 14 percent increase in the number of pending sales of new construction during the month, and while single-family houses made up about 76 percent of all sales, sales of more affordable townhouses increased dramatically. Also on Friday the U.S. Census Bureau said that housing starts during January 2018 increased 9.7 percent compared with the previous month.
The January freeze follows one of the strongest — and most challenging — years for buyers and sellers. During 2017, inventory levels fell to a 15-year low, sales were just 12 closings shy of an all-time 2004 high and the median price of those sales reached an all-time high.
"We're still on solid footing coming off a strong year with good fundamentals," Urbanski said.