Minneapolis Area Association of Realtor’s Weekly Market Update report shows continued improvement in the market conditions. With pending sales maintaining a strong pace and fewer homes hitting the market, the inventory has remained low this Spring. With few homes for sale and more buyers, pricing will tend to rise. We are seeing a lot of multiple offer situations in the lower price points which is forcing buyers to purchase up in price point. Keep in mind, they are still buying at bargain pricing… …but for how much longer?
For the Month of May, the median sales price increased 10.5% to $169,000. With only 4.5 months supply of inventory, market time is decreasing and percent of list price received is increasing.
We have not seen this low of months supply since 2005/2006, this is significant…
To understand the months supply, just remember that it takes 4-5 months to build a home (aka – add 1 unit back to the inventory.) So at 4.5 Months Supply, we are depleting inventory as quickly as it can be replaced, I would consider that a very healthy balance in the market. When we see the months supply dip below 4 month, prices will begin to climb and there will be another building boom starting. (and the cycle starts all over… but hopefully not to the degree we saw in the last boom/bust cycle..)
In the Twin Cities region, for the week ending June 2:
- New Listings decreased 17.4% to 1,382
- Pending Sales increased 27.2% to 974
- Inventory decreased 29.9% to 17,607
For the month of May:
- Median Sales Price increased 10.5% to $169,000
- Days on Market decreased 19.5% to 125
- Percent of Original List Price Received increased 3.8% to 94.5%
- Months Supply of Inventory decreased 45.2% to 4.5