Weekly Market Activity — Week of June 1st 

Home sales in the Twin Cities housing market took another dip as the hangover from the tax credit expiration continued. For the week ending May 22, there were 624 pending sales-a precipitous drop of 42.5 percent from a year ago.

The biggest drops in sales since the credit ended can be seen in the traditional seller market (i.e., anything that's not a foreclosure or short sale) and in the middle price ranges from $150,000 to $350,000. Pending sales have dropped in those ranges from 1,085 the week the credit ended to 384 for the week ending May 22. In sum, it may be a difficult summer market for home sellers.

The good news is that new supply is also slowing, which means the market is already self correcting to avoid a surge in unneeded inventory. New listings fell to 1,581 for the same reporting week, a decline of 15.8 percent from this time last year.

The Supply-Demand Ratio has been updated for June and shows a figure of 5.05, which means there are 5.05 homes for sale for each buyer in the month. That's a 10.9 percent increase over the mark seen a year ago and is a result of the decline in buyer activity.

Monthly Indicators — February 2010

For the fourth consecutive month, median home prices in the Twin Cities 13-county metropolitan area showed a year-over-year increase. We haven't seen four consecutive months of progressively increasing year-over-year growth since June 2004.

The April Median Sales Price of $169,800 was a delightful 11.0 percent increase from last April's mark of $153,000. That's the strongest year-over-year increase since we've had reliable data (2001). This strong upward price mobility is partly due to underpriced lender-mediated inventory that has migrated through the system.

The tax credit-inspired buying frenzy continued to bring inventory down slightly. Sellers tried to capitalize on it too and may have gone a bit overboard by listing 20.0 percent more homes on the market than during April of last year. The May Supply-Demand Ratio of 5.69 means that there are 5.69 homes available per buyer. In April 2008 the mark was 7.28.

Sellers currently exceed the 5-year YTD average Percent of Original List Price Received at Sale figure of 93.5 percent of initial asking price this month. Months Supply of Inventory weighed in at 6.7 months, just outside the five to six months range in an ideal, balanced market.

Housing Supply Outlook — What to Watch For

The townhome market segment has made dramatic strides in the last year. A year ago there was 9.3 months of supply -- today there is only 6.5 months of supply. That's the biggest improvement among the various property types by a country mile. Townhomes below $120,000 have seen the largest drop in supply, as homebuyers using the tax credit have soaked up a heavy portion of the inventory.

Sellers are getting closer to their original asking prices for every property type except condominiums, where the mark from the last 12 months of 90.2 percent is slightly lower than it was a year ago.

Sales are up in every price range except above $500,000, where sellers still face challenging conditions brought on by a dearth of buyers.

Source: Minneapolis Association of REALTORS®