Lack of inventory stalls transactions in a competitive market
In a sign that the heated summer sales season is cooling, closed sales of residential homes in Minnesota declined 3.0% compared to August 2020. New listings dropped 3.8% over last year. Despite shrinking inventory, buyers scrambled to purchase homes, competing with multiple offers that drove the median sales price up 11.3% to $316,000. Consequently, available properties were quickly purchased, with days on the market plunging by 38.1% to just 26 days. The number of homes for sale declined 25.0%, leaving a 1.5-month supply of properties for sale. Sellers profited from the high demand, averaging 101.7% of their asking price on a typical transaction. That marks a 3.4% increase over August 2020.
“As we head into fall, buyer demand is still far outpacing supply. Despite the ideal environment for selling a home, a lot of potential sellers are sitting on the fence. They’re worried about their ability to find an affordable property after they sell,” said Chris Galler, CEO of Minnesota Realtors. “With school starting again, many sellers will wait until spring before they think about putting their homes on the market. It’s a cycle that’s likely to repeat until market forces increase inventory or rising interest rates put the brakes on purchasing power.”
August year-over-year summary of key market indicators:
- Closed sales decreased 3.0% to 9,688
- Median sales price increased 11.3% to $316,000
- Average sales price increased 13.4% to $367,407
- New listings decreased 3.8% to 11,499
- Pending sales decreased12.0% to 9,261
- Days on the market decreased 38.1% to 26 days
- Homes for sale decreased 25.0% to 11,956
Closed Home Sales Across Minnesota by Region
Closed sales were down across the state with 10 regions reporting declines compared to August 2020. The exceptions were Southwest, which marked a 5.0% rise in closed sales, and Central which was up 1.8%. Three regions saw double-digit declines: West Central at -25.3%, Headwaters at -11.1%, and Arrowhead at -10.7%. See the chart below for more details comparing closed home sales for August 2021 to August 2020.
The seven-county Twin Cities region comprises Anoka, Carver, Dakota, Hennepin, Ramsey, Scott and Washington counties. The official Minneapolis-St. Paul-Bloomington metropolitan statistical area recognized by the Census Bureau consists of 16 counties, on which MAR & SPAAR local associations report.