June saw Twin Cities home sales decline by 10.8%, according to a new report from the Minneapolis Area Realtors and the St. Paul Area Association of Realtors, continuing a trend from May that saw sale activity decrease 5%.
As previously reported by Finance & Commerce, SPAAR President Amy Peterson and MAR President Jamar Hardy attributed the decrease to would-be buyers focusing less on selling their home and more on the end of school and planning vacations. Hardy said he expected the downward trend to continue into June’s market.
And that it did. Sales across asset classes have hit a lull. Sales of single-family homes dropped 8.5%, condos fell 21.1%, while townhomes decreased 17.2%.
Hardy, in a Tuesday interview, said he believes the same reasons as last month are responsible for the drop but said that the unseasonably wet spring and early summer are other possible culprits.
“We heard a lot that it's raining, people aren’t necessarily getting out doing much, people are kind of staying home,” he said. “Obviously certain markets of our area, they’ve delt with flooding and it wasn’t just the last 15 days. ... I think there’s a little bit of that that’s been a bit of a distraction to the market.”
However, Hardy says the interest rate environment is still the primary reason for sales decreasing. Second-time or third-time homebuyers are normally the ones purchasing above the half a million mark, and Hardy said rates are starting to make some of these homebuyers consider whether they should leave behind a lower interest rate on their current home.
“That’s why I always say money’s going to have to get a little bit cheaper for some people to come off those 3% mortgages.” Hardy said.
For the rest of the summer, Hardy expects that this year may follow a pattern from the COVID-19 pandemic where July, August and September ended up being some of the busiest months that Realtors saw, but says he is hoping the rain stops to help the market.
The market remains in the hands of the seller, with 2.4 months of inventory in the Twin Cities and the days on the market are, on average, 34 days, up 9.7% from June 2023. The median sale price of a home was at $390,000, 1.8% higher than this time last year and compared to $385,000 from the previous month.
The new construction market saw an 0.2% increase in sales, though previously owned homes saw a decrease of 11.6% in sales activity.
Greater Minnesota’s home sale numbers also decreased, with pending sales down 13.2% from June 2023, though Minnesota Realtors President Geri Theis said she thinks the rest of the state is doing slightly better than the metro.
The entire state, including data from the metro, has an inventory of 2.6 months and the median sale price is $355,000, up 1.4% from this time last year, according to a statewide home sale activity report from Minnesota Realtors.
The report’s affordability index also shows that median income is only 90% of what is necessary to purchase a median home.
“People are just not as comfortable right now with where prices are and where interest rates are to move forward,” Theis said. “I do see those interest rates coming down, so I’m optimistic that in the future we’ll see a little bit of that change.”
RELATED: May slowdown in Twin Cities home sales
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