MINNEAPOLIS (August 15, 2022) — In July, closed sales fell 19.2% compared to a year ago, with 7,904 transactions across the state. New listings were also significantly down, declining 14.2% compared to July 2021, although the total number of homes for sale rose 6.4%. Across the state, there was a 1.9-month supply of homes on the market, up almost 19%. Despite signs of a slowing market, the average home price was up 9% to $391,958, and total days on the market decreased nearly 4% to 25 days, indicating that competition for homes in an affordable price range remains high. Sellers were still receiving 101% of their asking price, although that number was down 1.7% from July of last year.
“After two years of record-breaking sales, the market is beginning to look more normal. And that’s good news for buyers,” said Chris Galler, CEO of Minnesota Realtors. “While there’s still fierce competition for the best homes at affordable price points, the increasing inventory is beginning to ease those frantic bidding wars. Buyers are feeling less pressured and taking the time to do inspections. The sale may take longer, but the upside is it reduces the likelihood of future legal disputes. Rising interest rates remain a barrier, especially for first-time homebuyers who are locked out of the market. In the short term, this is increasing demand for rentals and pushing up prices. As the overall housing supply grows and inflationary pressures ease, the trends will favor those who want to own a home.”
July year-over-year summary of key market indicators:
- Closed sales decreased 19.2% to 7,904
- Median sales price increased 7.9% to $339,900
- Average sales price increased 9.0% to $391,958
- New listings decreased 14.2% to 9,958
- Pending sales decreased 19.5% to 7,298
- Days on the market decreased 3.8% to 25 days
- Homes for sale increased 6.4% to 13,539
Closed Home Sales Across Minnesota by Region
In July, closed sales declined in 12 out of 13 regions compared to a year ago, bringing Minnesota’s average number of closed home sales down 19.2% year over year. Only one region reported an increase: North Central at 4.9%. The smallest declines were seen in East Central at 8.1%, Southwest Central at 8.7%, and Upper MN Valley at 13.5%. The largest declines were reported in Northwest at 31.5%, Southwest at 31.7% and Headwaters at 39.2%. See the chart below for more details comparing closed home sales for July 2022 to July 2021.
The kitchen is the room homeowners most frequently remodel. Some 28% of renovating homeowners give the kitchen a makeover, and 1% of those create a kitchen addition. Guest bathrooms and other nonprimary bathrooms are the second-most-frequently updated rooms, with 26% of homeowners remodeling one of these spaces; 2% of those create a bathroom addition.
About 1 out of 5 homeowners (24%) remodels or adds a primary bathroom, and 21% do the same with a living or family room.
And just as renovation activity has hit its highest rate in four years, so too has renovation spending. The right side of the chart seen here shows median spending amounts for various interior room projects, as well as the year-over-year increases from 2020 to 2021.
The median spend on a kitchen remodel is $15,000, a 25% increase from 2020. Guest bathroom spend is up 38% year over year, to $4,400. Living room spend rose 33%, to $4,000. Laundry room spend also increased 33%, to $2,000. And all other rooms except closets saw year-over-year increases in median spending.
Keep in mind that the median means that half of the people spent more and half spent less; it’s not the average. Economists like to reference the median, or midpoint, figure rather than the average because the average can be skewed, can be volatile year over year and can be misleadingly high or low because of a single project that costs far more or less than others.