Weekly Market Activity

The Twin Cities housing market in early 2010 looks pretty much like it did in early 2009. How similar? Over the last three months, there have been 7,189 signed purchase agreements; there were 7,186 a year ago during the same time period. Eerie, no? Robotic precision.

For the week ending February 13, there were 711 pending sales, down 2.7 percent from last year, and new listings posted 1,764 units, up 4.9 percent from a year ago. The only thing that's really changed much is the supply of available homes, which continues to dwindle relative to a year ago. The current stock of 22,271 available homes represents a 12.4 percent decline from a year ago.

A few additional stats for the New Year

Housing Affordability continues at historic levels: rising to 208 for January, an 8.3 percent increase from the previous year and a good sign for buyers in the year to come.

The Months’ Supply of Inventory is back in balanced market territory at 5.0 months. This is a dramatic 34.2 percent under the supply at the beginning of last year. With a balancing supply and demand and the possibility of rising interest rates on the horizon, this is a unique opportunity time for Twin Cities' home buyers.

Monthly Indicators – January 2010

After 41 consecutive months, four Super Bowls and a presidential election, the Twin Cities housing market finally posted a median sales price that was higher than the same month a year ago.

The January median sales price of $157,000 was a 1.3 percent increase from last January’s mark of $155,000. That’s the first year over- year increase since July 2006. 1.3 percent may seem pretty "ho-hum," and in an ordinary market it is. But in light of the three year roller coaster we’ve been riding, "ho-hum" sounds glorious right now.

There’s a lot of positive news, but the Federal Home Buyer Tax Credit and extremely low mortgage rates have been the two main drivers of the market’s recent momentum and, unfortunately, both of those market boosters may be near their eventual end.

Housing Supply Outlook – What to Watch For

The new construction market has made huge strides in cutting down on oversupply the last year. The inventory of newly built homes has dropped to 2,175, down 32.6 percent from the last year. Meanwhile—on the demand side—sales picked up during 2009 thanks to the federal tax credit for first time buyers. The combined effect is that the Months Supply of new construction inventory has fallen from 11.0 to 7.8 in the last year.

Does that mean its time for builders to start putting new projects in the ground, post haste? Not quite. The impending loss of the federal tax credit and a likely increase in mortgage rates down the road mean that downward pressure on home sales is on the horizon. Regardless, the new construction market is in a much better place than it was a year ago.

The biggest growth in new construction home sales can be found in the lower price ranges of single-family detached properties. Sales are up strongly in that segment over the last 12 months.

Source: Minneapolis Association of REALTORS®