Have you read the headlines? If you have picked up a newspaper or read news online you have certainly come across a few articles regarding the residential real estate market. This shouldn’t be surprising; after all it was the housing bust that led to the recession of 2008 and the recovery that has helped fuel the recent US economic recovery. The health of the US housing market is relevant to everyone, whether you own a home or not.
Locally, the market remains extremely strong as we transition into fall. Due to seasonality activity usually wanes this time of year, but not this year. The primary reasons for this are an imbalance between buyers and sellers and the specter of elevated mortgage interest rates. The belief that rates will begin to increase has had a motivating effect for buyers. Unfortunately, the supply has not kept up and many buyers are ready, willing and able to purchase but are unable to find a home to buy.
Here are a few year-over-year statistics:
• New listings – Up 7.1%
• Pending sales – Up 17.9%
• Median sale price – Up 6.8%
• Inventory of homes for sale – Down 13.6%
• Months supply of homes for sale – Down 23.9%
A quick look at the relevant stats above tells a story; while we have had an increased number of homes listed compared to 2014, supply has not kept pace with demand. The median sales price has had a healthy and sustainable increase, which is great news. The final two stats, inventory and months supply, scream “lack of supply”.
The topic that many are focused on is whether the Federal Reserve will increase interest rates by the end of the year. Until recent weeks, it was assumed that they would increase this month but that has become more uncertain due to events in China and elsewhere in the world. It is likely that mortgage interest rates will begin to increase by year end and that the increase will be modest.
In the meantime, we will probably continue to have a short supply of homes for many buyers. Homes are listed in the fall and winter in MN, but at more modest levels than the spring and summer months.