Twin Cities Housing Market: April - 2019
The competitive spring housing market is in full swing and Twin Cities housing prices for most segments are on the rise. It should be noted that although the seasonal boom in sales is underway, pending sales in March were down 12% year over year despite lower mortgage rates and the same inventory level as last year. Sales are down year over year all across the nation which could be considered evidence that although we are experiencing the seasonal micro-economic boom, there could be a macro-economic slowdown looming.
Mortgage Rates: Mortgage rates continued to fall at the end of March and bottomed out at 4.06% for a 30-year fixed mortgage which was a 15-month low. However, in April, mortgage rates have been steadily climbing and currently sit at 4.2% for a 30-year fixed.
Home Builder Confidence: In March, the home builder confidence index inched up ever so slightly from 62 to 63.
Closed Sales: 3,694 residential closings took place in the Twin Cities during March. That is up 30% month over month but is down 9% year over year.
The Median Home Price: As expected, the median home price in the Twin Cities moved up 4% in March to a new record high of $275,000. We expect housing prices to continue to rise for sales that close in April, May and June, before the summer slowdown sets in so prices will likely continue to set new records through the next 3 months of our analysis. It should also be noted that the rising costs of new construction for new homes breaking ground this year have given an added boost to many of the existing home values in luxury price point segments.
New Listings: Not including what I call “new construction shadow inventory” which are essentially new lots that builders have developed to sell into, 6,196 new homes and condos hit the Twin Cities market in March. That is up 41% month over month but down 8% year over year.
Homes for Sale: March ended with 9,031 active listings which is up 6% month over month, flat year over year, down 37% from 5 years ago and hovering very new a record low. Low inventory continues to be one of the catalysts for the bull market in housing prices that has been going on now for 8 years and counting.
Pending Sales: 4,583 homes and condos came under contract in March which is up 33% month over month but down 12% year over year. You could attempt to attribute some of the year over year decline in pending and closed sales to a slow start to the season, weather wise, but remember, we had an even slower start last year. You could attempt to attribute some of the slow down to the low level of inventory but remember, the inventory level was almost identical last year at this time. You can’t blame mortgage rates because rates were significantly higher last year at this time. To me, this appears to be a seasonal micro-boom during the beginning of a macro slowdown. All bull markets run their course and this one is bound to come to an end someday.
This concludes my insight for April. Please don’t hesitate to connect with me if you would like to discuss the market conditions in your neighborhood or price bracket and thank you for taking the time to watch this video.
By Nick Leyendecker, Founder, Broker, REALTOR®