June 2022 real estate market update… inventory supply increases for the second month in a row

You have no doubt heard that the real estate market is softening. Don’t assume this means it is now a bad time for sellers to be listing their homes for sale. Far from it, it is still a strong sellers market… but months supply of inventory has risen for the second month in a row after 7 years of continuous drops compared to the previous year. In June 2021 the supply dropped 38.1%… in June 2022 months supply increased 23.1%. Keep in mind that the market is balanced when there is a 5-6 month supply so we still have a long way to go but the market is starting to adjust.

2022-06-historical months supply

New listings, pending sales and closed sales all dropped in June 2022 compared to last year.

2022-06-new-pending-closed

Many people are worried that home prices are going to crash again as they did 10-15 years ago during the Great Recession. Keep in mind that recession was caused by poor mortgage lending practices… the real estate market CAUSED the recession. Now prices are rising because of the laws of supply and demand. There is still a severe shortage of inventory… that is what is causing prices to rise.

Days on market before pending rose slightly and percent of list price received dropped slightly in June… both signs of less pressure on the market and good signs for buyers. But median sales price still rose 8.6% in June 2022, to an all-time high of $380,000. This is still lower than the 14.8% increase in sales price in June 2021. Again, a good sign the market is starting to moderate but also still a good sign for sellers that homes to buy are still in demand.

2022-06-DOM-percent-price

I recently saw the chart below, showing that national price gains have been over 20% for most of this year, even higher than last year. I wondered how that compares to Twin Cities home price gains and was pleasantly surprised to discover that our price gains are less than half the national average. Instead of more than 20% price gains, June 2022 only showed an 8.6% price gain over June 2021… a sign that our price increases are at a healthier level even though they are still steadily climbing.

2022-06-home price gains

I know I see it in the decline in the number of multiple offers… although the high demand properties still often times sell with crazy offers well over list price. But median sale prices declined to 103.3% over list price in June 2022 instead of 104.1% over list price in June 2021.

There is no true way of tracking the number of multiple offers received before accepting an offer, but I have tracked the number of ‘multiple’ offers in agent comments the last four years to at least give an indication of the changes taking place in the chart below. I consider 2019 was a relatively ‘normal’ year… multiple offers come into play on demand listings in any market. But you can see how they started to increase in 2020, went nuts in 2021 and after a strong start in 2022 are now slowing down. Again… don’t think multiple offers are over but there is more hope for buyers… and more incentive for sellers to have their homes show as well as possible to entice buyers.

2022-06-pending multiple offers

Overall months supply of Twin Cities inventory was 1.6 months in June 2022, a 23.1% increase over last year… but is different for different property types and price ranges. Condos continue to have more availability that houses and townhouses, but no longer have a significantly larger supply. It is still a seller’s market in all price ranges, but supply increased the most in the $350k-$500k and $500k-$1M price ranges… where buyers may have been most strongly impacted by the rise in interest rates. It also continues to amaze me that even prices over $1,000,000 have less than a 5-month supply. Months supply in that price range has been rising, an increase of about a month from last month’s supply of 3.8 months.

2022-06-months supply by type-price

Months supply of inventory increased 8.3% for previously owned homes and 87% for new construction. Last year the supply chain was so impossible for new construction, hopefully this is a sign that is easing.

2022-06-new construction inventory

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.

Click here for local reports on 350+ metro area communities

Sharlene Hensrud, RE/MAX Results – shensrud@homesmsp.com

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I love what I do! Highly insightful, analytical and creative, there is nothing I love more than helping you find the right solution for your real estate transition. My mission is to serve my clients with honesty and integrity, exceeding their expectations in service and support… and to help others by donating a portion of every transaction to Habitat for Humanity.

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