Twin Cities Housing Market: June & July - 2020
The median home price in the Twin Cities fell 3% in May from the COVID-19 related pause in April that primarily impacted upper bracket home prices, but then bounced back up to tie the record high of $305,000 in June as the bustling spring market picked up where it left off.
Based on the recent pick up in activity, we believe that the seasonally strong spring market has essentially been extended by approximately 2 months due to the COVID-19 crisis. As such, we believe that a new record for median home prices will be set in July and possibly even in August and September for closed sales and we are expecting the summer slowdown that typically starts in June for pending home sales to begin sometime in August or September.
Mortgage Forbearance in the US: As of July 5th, 8.18% of all mortgages in the U.S. remain in a state of forbearance. The prevailing economic view is still that the current state of forbearance is temporary and will mostly if not entirely resolve itself once the virus crisis ends, however it is worth noting that many of those economists expected to see the forbearance numbers significantly improved by now and they haven’t. There is a minority group of economists that believe that the forbearance issue is part of a late term debt cycle and that the forbearance issue will ultimately turn into a delinquency issue which could ultimately lead us into a bear market for housing in the U.S. Either way, mortgage delinquency is something that we will be keeping an eye on.
Mortgage Rates: Mortgage rates in the U.S. continued to fall in May, June and into July and currently sit at a new record low of 2.98% for the average 30-year fixed mortgage.
Home Builder Confidence: The NAHB housing market index in the US climbed 14 points from the previous month to 72 in July 2020, easily beating market expectations of 60 and returning to pre-pandemic level as sentiment rebounded following the easing of coronavirus-related restrictions. With the new wave of coronavirus lockdown proposals, confidence could decline again in the coming months.
Closed Sales: Closed sales moved up marginally in May from the COVID-19 related pause in April, but then moved up 33% in June with 6,193 residential closings. That was down 2% year over year.
The Median Home Price: The median home price in the Twin Cities fell 3% in May from the COVID-19 pause in April but then bounced back up 3% in June to tie the record high of $305,000.
New Listings: New listings started to recover in May and in June, but that pace remains well below year over year numbers. 7,499 new listings hit the market in June which is still down 21% year over year.
Homes for Sale: So far, the primary impact that COVID-19 has had on the Twin Cities market has been the inhibition of new listings which has resulted in the lowest level of inventory ever for the month of June. At the end of June, there were only 9,615 units of inventory in the Twin Cities which was down 8% month over month and down a whopping 26% year over year.
Pending Sales: 6,874 homes, condos and townhouses came under contract in June. That is the highest level of pending sales in June since 2004. That is up 17% month over month and up 7% year over year.
This concludes my housing market insight for the month of July and June combined. Please don’t hesitate to connect with me if you would like to have a more in-depth discussion regarding the conditions in your specific market segment or neighborhood and I thank you for taking the time to watch this video.
By Nick Leyendecker, Founder | Broker | REALTOR®