Twin Cities homebuyers no longer waiting for lower mortgage rates

Higher mortgage rates and a shortage of listings have yet to stifle home sales in the Twin Cities metro area. In fact, prices and closings are rising noticeably year over year.

Last month, there were 3,806 house closings across the region, a 13.8% increase from 2023, according to a monthly sales report from Minneapolis Area Realtors. The median price of those sales was $385,250, a 4.1% increase from a year ago. At the same time, buyers signed 4,334 purchase agreements, 8.5% more than this time last year.

“People are realizing that interest rates are what they are,” said Brady Holland, a Twin Cities real estate agent. “They’re saying, ‘We’re not going to sit for another year.’ If they need to move, they’re going to move.”

Mortgage rates, which have inflated house payments and chipped away at buying power, posted a series of very small but steady increases last month. The latest data shows after a five-week climb, rates have been hovering around 7% but ticked down a bit during the first week of April. The 30-year fixed-rate mortgage averaged 7.09% during the week ending May 9, according to a Freddie Mac survey.

The trends were similar outside the metro. Statewide, new listings increased 20%, pending sales rose 7.7% and the median price of all closings was $350,000, a 4.5% increase from last year, according to Minnesota Realtors.

Despite waning affordability, new listings have posted an annual increase for seven consecutive months, and pending sales have been up five consecutive months.

“Even as inventory levels rise, sellers are still finding they have the upper hand in most areas and price points,” Geri Theis, president of Minnesota Realtors, said in a statement. “Buyers should understand that while they have more options, there is still competition. That’ll be even more true if rates fall.”

According to that statewide report, the most-balanced markets between buyers and sellers were Detroit Lakes and Bemidji, while the tightest markets included St. Cloud, Rochester and the Twin Cities. Pending sales posted the biggest gains in the Alexandria, Grand Rapids and Bemidji regions.

Holland said homebuyers aren’t deterred, and many are finding workarounds, including rate discounts that many Twin Cities homebuilders are offering. Lennar, for example, has a “limited time” FHA fixed-rate mortgage as low as 4.99% on select properties through Lennar Mortgage.

Those incentives seem to be working. Through March, new home sales were up nearly 25% in the Twin Cities metro area, according to a rolling 12-month average from Minneapolis Area Realtors.

Read More:Twin Cities homebuyers no longer waiting for lower mortgage rates

2024-05-15 22:25:45

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