The Twin Cities metro has seen a dip in home sales in May, down 5% from this time last year, according to a new report released Tuesday from the Minneapolis Area Realtors and St. Paul Area Association of Realtors.
The slowdown stretched across most asset classes and price points, according to the release. Single-family sales dropped 2.3%, condos dropped 15.4% and townhouses fell 10.2%. Previously owned and new-construction sales saw a drop of 3.8% and 9.5%, respectively.
Meanwhile the average time on the market increased to 40 days this year, compared to 37.8 days last year.
SPAAR President Amy Peterson said this downturn is somewhat seasonal, and the end of school, along with graduation season, can be a damper on transactions.
Homes that cost over $500,000 were the one class to see sales rise, with an 8.7% increase.
Minneapolis Area Realtors President Jamar Hardy said he has seen home sales that are over the million-dollar-mark double. He said this is because these buyers can afford to purchase with cash and avoid the high interest rates.
Cash-rich individuals are not the only folks looking to avoid high interest rates. Peterson says high costs and interest rates are reasons why more buyers aren’t getting in the game.
“I think part of it too is that there’s so much pent-up demand,” Peterson said of affordable homes. “Some of those buyers are being priced out at market currently with the higher interest rates.”
The median cost of a home in the Twin Cities metro is $385,000, according to the report, a 4.1% increase from this time last year, though it is a $250 drop from last month’s median home cost.
This report comes the same month the Minneapolis City Council heard a report that showed the average home in Minneapolis is out of range for the average Black resident and predicted the average home in 2040 will be unaffordable for the average Minneapolitan.
Hardy, acknowledging that Minneapolis is pretty built-out, said something Minneapolis could do to try and counteract this is by helping its residents build equity. He said he would like to see more affordable structures built in the city, calling townhomes and common-interest communities untapped.
“I just don’t see permits or I don’t see developments being built with that affordable segment of townhouses anymore,” Hardy said.
If the city can figure out how to help residents build equity, according to Hardy, that will make entry to another home easier.
RELATED: Report: Homeownership out of reach for many people of color in Minneapolis
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