List-to-sale prices continued to shoot up due to intense buyer competition in the previous months when most of this month’s property sales pended. Average sale price in May was 4.0% over list price, which means many homes sold for prices much higher than that over list price. For many homes, list price acted more like a reserve price in an auction rather than expected sale price.
This intense competition meant that the months supply of inventory continued to be persistently low at only 1.0 months. It was the biggest year-over-year drop in the last 12 months, at 54.5% below May 2020.
New listings dropped to only a 2.6% increase over May 2020, while pending and closed sales both increased by more than 15%.
The intense buyer competition meant that days on market dropped 41.5% compared to last year, to an average of 24 days before becoming a pending sale. The percent of list price received increased every month, to an average of 104.0% in May 2021. Keep in mind most of these properties accepted offers in March and April before closing in May. Median sale price rose 16.1% over May 2020, to a record high of $342,500.
All this activity resulted in a drop in total inventory of 46.9%, and a drop in months supply of 54.5%, to only 1.0 months… evidence of the insane market competition for buyers. That has driven more buyers to new construction, which is also struggling to keep up with buyer demand.
I continue to be amazed by how low the months supply of homes is, regardless of price range. The most popular first-time homebuyer ranges of $150k-$350k all have less than a 1-month supply, and even $1M+ properties have only a 3.9 month supply. The market is considered balanced between buyer and seller when there is a 5-6 month supply. Houses and townhouses are tied with a 0.9 month supply… condos are higher, at a 2.4 months supply.
There are some signs the market is softening a bit in June. Zillow reports that price cuts are growing, and Redfin reports that competitive bids are down. I can feel it, both in listings and in offers my clients are making. There is still competition, but instead of 20 offers there may be 8 offers on a property… still not great if you are a buyer, but at least a better chance of submitting the winning bid.
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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Sharlene Hensrud, RE/MAX Results – shensrud@homesmsp.com
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