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MANKATO — After years of bidding wars and a decidedly sellers market, home buyers now have more houses to pick from.
What buyers don’t have is the low mortgage interest rates they’ve enjoyed in recent years.
“Certainly, the interest rates are keeping people from spending as much,” said Dick Norland, of Midwest Realty and a board member of the Realtors Association of Southern Minnesota.
Dick Norland
Statewide in June, closed sales of homes tumbled by nearly 14% compared to a year ago, with a total of 9,208 properties sold across Minnesota.
New listings were down 6.4% year over year even as the total number of homes for sale in the state increased 8.2% as more remain on the market longer.
In south-central Minnesota, the news was brighter.
Year-over-year closed sales in the region fell 6.4%, about half of the statewide decline. There were 235 closed sales in June locally.
And new listings increased in south-central Minnesota. In June there were 290 new listings, up 16.5% year over year.
“There’s some increase in inventory availability, so that’s good news for buyers,” Norland said. “They have more options and there are fewer bidding wars.”
While sales have slipped and there are fewer bidding wars, the price of homes sold in the region continues to climb. The median price of homes sold in June locally was $250,000, up 6.4% from the $234,900 median price last June.
Local sellers are, on average, getting 100% of their asking price this year, down just a bit from last year when homes were selling for an average of 102% of the asking price.
Norland said the industry is watching and waiting to see where interest rates will settle in as the Federal Reserve continues to look at how much to raise rates to fight inflation.
The 30-year-fixed rate is about 5.25%. “We expect that to go higher,” Norland said. “But that’s still historically a low rate. I think once people adjust to the rates we will be selling houses.”
Norland said the hottest properties continue to be those under $300,000.
Statewide, consumer demand drove the median sales price up 6.2% to $345,000 in June, according to Minnesota Realtors.
New listings decreased 6.4% to 11,417 year over year.
“Although new listings were down, the state’s total housing supply was up, drawing more prospective buyers into the market,” Chris Galler, CEO of Minnesota Realtors, said in a statement.
“As we look at the decline in closed sales, it’s important to remember that these numbers are relative to last June’s abnormally heated market. What we are seeing this month is more closely aligned with historical norms for this time of year.
“Still, as higher interest rates and inflation continued to play a role, many first-time buyers were sidelined.”
Closed sales declined in 11 out of 13 regions compared to a year ago. Only one region reported an increase: north central at 5.9%. The largest declines were reported in the seven-county Twin Cities at 16%, east-central at 18.8% and northwest central at 20.7%.
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