We now have statistics for the first half of 2015. This is a good time to pause and take stock of the market. In sports, halftime is an opportunity to assess what has transpired, check out the scoreboard and try to anticipate what the second half has in store. In this month’s post I will give you a halftime report.
The market has been amazingly strong in 2015, especially since March, and it’s showing little signs of weakening beyond the typical seasonal ebbs and flows of our real estate market. In June the market reached 10-year highs in pending sales and closed sales. This confirms what we already knew; sales have been fantastic and should remain that way in the immediate future. The low supply of homes for sale continues to be a challenge for some buyers and a boon for many sellers. That being said, due to low interest rates conditions are still favorable for buyers as well.
Below are the stats for mid-year 2014 compared to 2015:
Key Metrics – 2014 vs. 2015 – Variance
New Listings 39,967 vs. 43,928 +9.9%
Pending sales 25,461 vs. 30,623 +20.3%
Closed sales 22,895 vs. 26,534 +15.9%
Median sales price $200,000 vs. $218,000 +9%
Price per square foot $120 vs. $125 +3.8%
Number of homes for sale 18,321 vs. 16,597 -9.4%
Months supply of homes for sale 4.4 vs. 3.6 -18.2%
As you can see, the “scoreboard” looks darn good at halftime. What can be expected in the second half? The factor that could have the biggest influence is an increase in the mortgage interest rates. We have been hearing about this for years and they have yet to reach even 5%. However, I anticipate we will see slight increases as we enter the fall and winter months. The national economy continues to recover as does consumer confidence while unemployment is improving moderately. If this trend continues we will see slightly higher interest rates. The effect will be a modest slowing of the housing market, but nothing significant. In my opinion, at a certain point rates simply need to increase and a slight “cooling” of the real estate market may be healthy in the long term.
All indications point to a strong residential real estate market in the Twins Cities for the remainder of 2015. Stay tuned as the rest of the year unfolds.