01/23/2024
New Listings and Pending Sales Rise, Interest Rates Begin to Fall
MINNEAPOLIS, Jan. 16, 2023 —The 2023 housing market closed the year on a high note, as mortgage rates dropped below 7% in late December and new listings rose by 12%, the third consecutive month of increases.
As of this week, 30-year fixed rates are just above 6.5%. Since much of 2023 was a high interest-rate environment, even modest rate declines will ignite housing market activity. This is reflected in various metrics from December, most notably pending sales, which were up 8.7% from last year, marking the first year-over-year increase in that category since November 2021.
While buyers welcome falling rates, rising home prices remain a stubborn obstacle, as the median home sales price was up 3.3% to $315,000. This is a byproduct of an undersupplied housing market. While the months’ supply of homes improved 18.8% over last year, December still had just 1.9 months’ worth of available inventory, a sign that it’s still a seller’s market. A 4-6 month supply is typically needed to constitute a balanced market. Affordability challenges persist, driven primarily by limited inventory resulting in higher prices.
“While market activity typically slows with the onset of winter in Minnesota, falling interest rates are attracting both sellers and buyers back into the market,” said Geri Theis, 2024 president of Minnesota Realtors (MNR). “It’s likely that the 2024 spring market will be competitive, especially if mortgage rates continue to fall.”
December year-over-year summary of key market indicators:
Closed sales decreased 4% to 4,324
Median sales price increased 3.3% to $315,000
Average sales price increased 3.7% to $375,175
New listings increased 12% to 3,432
Pending sales increased 8.7% to 3,621
Days on the market rose 2.2% to 47 days
Homes for sale increased 1.9% to 10,336
By MNR News