Twin Cities Housing Market: February - 2019
The stage is set for another move up for Twin Cities home and condo/loft prices this spring. Inventory has bottomed out while showing and sales activity have begun their seasonal rise. Much of increase in prices is expected to come in the lower to mid-range price brackets. With rising land prices, the rising costs of construction and the increased scale of new developments, existing homes under the $400,000 price point do not have competition from new home and condo developments and in some areas, those minimum new construction price points are much higher than $400,000.
Mortgage Rates: Mortgage rates continued to fall in February and now sit at a 12 month low of 4.35% for a 30 year fixed, conventional mortgage.
Home Builder Confidence: The NAHB Housing Market Index for the US increased to a four-month high of 62 in February of 2019 from 58 in the previous month and beating market expectations of 59. The index component that tracks views of current sales conditions rose to 67 from 64 in January; the gauge of home sales over the next six months went up to 68 from 63 and the measure of buyer traffic advanced to 48 from 44. NAHB Housing Market Index in the United States averaged 50.24 from 1985 until 2019, reaching an all-time high of 78 in December of 1998 and a record low of 8 in January of 2009.
Closed Sales: Closed sales in the Twin Cities fell 28% in January to a 12-month low of 2,690 closings. Either January or February are typically the slowest month in the Twin Cities for closed sales, so this was expected and is likely a bottom for the next 11 months.
The Median Home Price: The median home price in the Twin Cities remained flat in January at $258,900 but is up 7% year over year. With the current dynamics of low inventory at the front end of rising sales activity, we do expect the median home price to rise from now through June.
New Listings: New listings climbed 82% in January as 4,372 new homes and condos hit the market. That is 8% more than the new listing activity of last January.
Homes for Sale: The home inventory level in the Twin Cities fell 8% in January leaving 7,881 homes for sale. Historically, that is a very low level and has set the stage for another move up in home prices starting right now.
Pending Sales: Pending sales volume appears to have bottomed out from it’s seasonal decline in December and rose 10% in January with 3,254 homes and condos coming under contract. The increase in pending sales in January signals the reversal from declining to rising sales volume. We expect pending sales volume to continue to rise through May.
This concludes my insight for February. 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®