Last December I reported a new trend of increasing inventory. As you can see in the chart above, it was short lived and this December the number of homes for sale fell 19.6% compared to last year.
2019 started with increases in inventory over last year for the first seven months, then dropped every month for the rest of the year.
It is interesting that the trend in increasing inventory started in the fall of 2018, when average mortgage interest rates rose to 4.87%… and started falling again as average rates fell to 3.62% in August of this year. Bottom line is our real estate market is again at the mercy of available inventory as interest rates remain low.
You can see how this plays out in other December 2019 stats below.
New listings increased 3.9% compared to last year… but pending sales increased even more at 8.2% and closed sales increased 13.0%. Both pending and closed sales showed the highest increase of the year in December 2019… which is why it felt busier than a typical December.
Days on market continued to drop, to 56 days. Even percent of list price was strong, will average sale price 97.3% of list price. Median sales price continued its steady climb to $279,000, 8.2% above December 2018.
Months supply of inventory dropped 19.6% to 1.5 months, the same as it was in December 2017. Townhouses continue to be in shortest supply, at 1.1 months.
Months supply of inventory is said to be balanced when there is a 5-6 months supply. We are in a very strong seller’s market, with only homes priced over $1,000,000 in a buyer’s market… and not a very strong one.
Signs indicate this is a good time to be a seller!
The data in this post comes from statistics released by the Minneapolis Area Association of Realtors. They offer interesting insights below into what to expect in 2020.
Low mortgage rates, low unemployment and still-decent job and wage growth should keep housing demand strong into 2020. New construction activity rose in 2019 and should continue into 2020, but neither Minnesota nor the Twin Cities are building enough new units to quench demand. It remains to be seen whether existing homeowners will be enticed to sell by higher home prices, which could finally bring the overall market into greater balance. While a 2020 slow-down is by no means imminent, the maturing business cycle is starting to grow long in the tooth.
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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Sharlene Hensrud, RE/MAX Results – shensrud@homesmsp.com
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