A common question I get is, “how’s the market?” I’m glad you ask. Home prices rose steadily throughout 2018 even as sales activity was in fluctuation compared to 2017 levels. Strong demand for a limited number of homes for sale fueled price increases along with a higher-end properties. November showed the first inventory increase since 2015, and buyers should expect inventory to continue to improve in 2019. More homes for sale should limit the magnitude of price increases, but more inventory doesn’t always lead to weaker pricing. Absorption rates can be a better indicator of price momentum (number of sales per month divided by the total number of available homes). According to Minneapolis Area Realtors, with data from NorthstarMLS, here are the numbers compared to the previous year:
- Pending home sales are down -3.3% (2,918).
- Closed sales are down -9.9% (3,706). Sales were down compared to last year. Some buyers are willing to wait for more favorable pricing at a time of diminished housing affordability.
- Homes newly listed are up +3.5% (2,391). Good news for inventory! More homes entering the market makes competition less.
- Median sale prices are up +4.0% ($258,000). Last month, price increases were found across the board. That may change in 2019.
- Homes currently for sale are up +4.4% (8,128). Inventory is beginning to perk up nationally and in the Twin Cities.
- Days on the market is down -6.6% (57 days). On Average, you can expect to have your home take about two months to sell. This is still historically very good.
- Months of supply of homes are up +13.3% (1.7 months). This indicator measures the balance between buyer and seller activity. Supply over 6 months indicates a buyer’s market. Supply under 5 months indicates a seller’s market.
- Percent of original sales price received is down slightly -0.2% (96.9%). Sellers continue to enjoy a healthy share of their list price.
Generally speaking, unemployment rates remained remarkably low again in 2018 and wages continued to improve for many households. The issue is now a lack of labor supply. Incomes haven’t quite kept pace with home price increases. This created an affordability crunch in the second half of 2018. Housing affordability will remain an important storyline in 2019. Learn more here