After three months of decline, pending sales inched up again in August. Slashing prices on properties for sale has been in the news a lot lately, and perhaps that has been encouraging buyers back into the marketplace after the end of the tax credit. Whatever the reason, it is a good sign because pending sales are what predict future closed sales.
Closed sales declined again in August, but again remember… that should come as no surprise because pending sales have been down for three months and closed sales lag behind (as you can clearly see comparing the graphs for pending and closed sales). It will likely take a couple months for closed sales to catch up with pending sales, so I would expect closed sales to be down again in September.
This huge drop really demonstrates the impact of the expired tax credit. Actually, the erratic trends in the graph above are good illustrations of the impact of external forces shifting buying patterns… note the bumps up in October-November 2009, marking the predicted end of the tax credit last year… and even further back the bump up in September 2008 marking the end of 100% financing.
Speaking of 100% financing, there is a new attempt at 100% financing through a new program from Fannie Mae and the Minnesota Housing and Finance Agency I just heard about… let me know if you want more info.
New listings are holding pretty steady, but weak sales are keeping the supply higher. It is interesting to note that the increase is only in houses, while the supply of townhomes and condos has actually declined compared to last year at this time.
Months supply of inventory is perhaps the most telling measure, because it takes into account both the supply and demand. I find it fascinating that months supply of properties for sale has been exactly the same for houses and townhouses for the last 5 months… both inching up to the current level of 7.8 months. A balanced market is considered between 5 and 6 months, so you are correct in feeling that this is a buyer's market.
Sales have been declining in the lower price ranges and increasing in the upper price ranges, resulting in more homes in the lower price rangess and fewer homes priced about $250,000 than there were last year at this time. For example, even though a 31.6 month supply of homes available in the $1M+ category is a long time, it is still much better than it was last year at 41.7 months!
After increasing each month the first half of the year, median prices have moderated down a bit… August the same as July and May at $175,000. With price slashing one might expect median price to continue down, but it's hard to say. Part of the increase reflects a change in the product mix, and if the shift toward higher priced homes continues median price could also reflect that in coming months.
The figures above are based on statistics for the combined 13-county Twin Cities metropolitan area released by the Minneapolis Area Association of Realtors. Click here for links to local reports for 125 metro area communities.
Sharlene Hensrud, RE/MAX Results - Email – Minneapolis – St. Paul Real Estate Market Information
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