Although the housing market in the Twin Cities metro posted only modest gains during November, house prices rose to a new high.
Last month, home closings were down slightly compared with last year, while pending sales — an indication of future closings — increased just 2.8% compared with last year, according to a monthly report from the Minneapolis Area Realtors.
And with demand for the least-expensive houses outpacing supply and buyers of many of those properties paying more than the sellers were asking, the median price of all closings during the month increased 5.6% to $279,900, a record for November.
“We’re on solid footing heading into year-end,” said Todd Urbanski, president of Minneapolis Area Realtors.
Home sales in the Twin Cities have been stifled by a lack of houses that are affordable to entry-level buyers and downsizing baby boomers. At the same time, the supply of move-up houses has been on the rise, giving upper-bracket buyers plenty of options.
Across all price ranges there was a slight decline in new listings last month, mostly because of a steep decline in listings priced at less than $200,000. Not so for move-up buyers — those in the market for a house priced at more than $200,000 have had more options than they did last year.
That imbalance is reflected in the time it takes to sell a home. The median market time for a home priced at less than $250,000 last month was just 25 days, nearly four times faster than a house priced at more than $1 million.
Sales remain on pace to exceed 2018 despite a slight decline in closings during November, upending four consecutive months of increases. Pending sales have increased for five consecutive months, including November.
Analysts said this trend points to solid demand heading into 2020. “More inventory would be nice, but rates are fantastic, the economy is still growing and consumers are confident,” Urbanski said.
While consumers have been buoyed by near-record low mortgage rates that remain below 4% for a 30-year fixed-rate mortgage and a declining unemployment rate, the housing market across the country is experiencing a slight correction that’s being driven by record home prices that have made homeownership difficult in many more expensive markets.
The latest S&P CoreLogic/Case-Shiller Index, which was released earlier this month, shows that price gains across the country, but especially in bigger coastal markets, have narrowed during the past several months. During October, the index showed that home prices nationwide increased 3.5%, down from 5.2% at the same time last year. Price gains are largest among the least-expensive houses but decline as the price of the home increases. That trend is playing out in the Twin Cities metro, where the annual gain is in line with the national average.
“National news headlines have little to do with our local market,” said Linda Rogers, president-elect of Minneapolis Area Realtors, in a statement. “Our state and local economies are hardy and diversified, good news for home buyers.”