After crying about a lack of new listings for what seems like forever, new listings in October 2018 were ahead of last year for the 4th month in a row, with an increase of 9.2%. However, new listings alone don’t tell the whole story.
In my mind, the best indicator of the real estate market is months supply of inventory because it takes into account both the number of homes for sale and how quickly they are selling. The market is most commonly considered balanced when there is a 6-month supply of homes for sale. In other words, all homes currently listed for sale would be sold in 6 months if home sales continued at the current rate.
In the chart above that tracks months supply of inventory back to 2004, it was a buyer’s market 2006-2011… and has been a seller’s market since then. The months supply has been dropping every year since 2014, but while there were significant year-over-year drops at the beginning of 2018, it is leveling off rather than dropping as we approach the end of the year. In fact, months supply of inventory was the same in October 2017 and October 2018.
But don’t confuse a drop, or even a rise, in months supply of inventory with a sign the market is in trouble. It is rather a sign that the market appears to be slowly re-adjusting to a market more balanced between buyer and seller.
Closed sales were up 3.2% while pending sales were down 1.7% in October 2018.
Median sales price rose 8.6%, to $265,000. Average percent of list price received was the same as last year, at 97.9%. Days on market before sale fell to less than 2 months, 7.7% below October 2017.
All of this resulted in an inventory drop of only 2.2% year-over-year, compared to drops of 15-20% in November 2017-April 2018. It will be interesting to see what the end of this year brings.
Although year-over-year months supply continues to vary by price range, net change was the same as last October. The supply of homes in the $500k-$1M price range are pretty balanced between buyer and seller.
Townhomes continue to be in shortest supply, in demand with both first-time buyers and empty nesters.
Patterns are showing a shift to a more balanced market but we still have a way to go. For now, it is still a buyer’s market in price ranges below $500,000.
The figures above are based on statistics for the combined 13-county Twin Cities metropolitan area released by the Minneapolis Area Association of Realtors.
Never forget that all real estate is local and what is happening in your neighborhood may be very different from the overall metro area.
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