This concludes my Twin Cities housing market insight for March of 2023. Please don't hesitate to call us at (952) 222-7653. if you would like to go more in-depth on a particular market segment or dive into the current fair market value of a property that you currently own or manage.
Sources: NorthstarMLS, Infosparks Data, Hedgeeye Risk Management, FreddieMac.com, Nasdaq.com, TradingEconomics.com, fred.stlouisfed.org, The National Association of Home Builders
Despite Higher Mortgage Rates and Declining Sales Volume, Twin Cities' Home Prices Held Bullish Trend Through the Winter
Published: 01/17/2024 | Category: Market Insight | Co-Authors: Nick Leyendecker, Founder, Principal Broker | Tony Leyendecker, Director of Inside Sales
Despite the new interest rate regime and the challenges that has presented to the market, home prices in the Twin Cities held on to their bullish trend during the winter correction phase. The higher interest rate environment has so far been significantly impacting both supply and demand as many current owners either can't afford to trade out of a 3% mortgage in exchange for a 6% mortgage or are just resistant to it for obvious reasons, limiting the market to the most motivated and qualified of the movers. With inventory levels back down near record lows, the stage is set for another spring rise in Twin Cities' home prices.
The Median Home Price: The Twin Cities' median home price in February was flat MOM and flat YOY. The higher interest rate regime which began in January of 2022, has caused a significant contraction in sales volume which has put a dampening on this 11 year, bull market trend but with record low inventory, prices have held within that trend. With spring demand starting to take off and with only 5,500 homes on the market, prices are going to be moving up this spring but I'm not convinced we will take out the highs from 2022.
Home Inventory: The home inventory level in the Twin Cities fell 6.6% in February to 5,549 units (homes, condos and townhouses). That level is only 11.5% above last year's all-time low which is bullish for housing prices this spring despite the higher interest rate headwinds.
Pending Home Sales: 2,926 homes came under contract in the Twin Cities in February. That is up 13.2% MOM and marks the beginning of the rising spring demand curve.
New Listings: 3,463 new listings hit the Twin Cities market in February which is up 3.7% MOM but down 23.3% YOY.
Mortgage Rates: The average 30-year fixed mortgage rate (for the week of March 23rd) of 6.42% is down 1.2% MOM and up 45% YOY. The cycle peak thus far for 30-year fixed rate was 7.08% back on October 27th of 2022 and long term rates have been in a correction since.
Home Builder Confidence: “The NAHB/Wells Fargo Housing Market index in the US increased for a third month to 44 in March of 2023, a new high since September of 2022 and beating market forecasts of 40. The gauge for current sales conditions rose to 49 from an upwardly revised 47, and traffic of prospective buyers edged 3 points higher to 31, hitting a 6-month high. On the other hand, sales expectations in the next six months fell slightly to 47 from 48. “While financial system stress has recently reduced long-term interest rates, which will help housing demand in the coming weeks, the cost and availability of housing inventory remains a critical constraint for prospective home buyers,” Robert Dietz, NAHB chief economist, said.” -National Association of Home Builders
