March 2023 real estate market update… first time in many years that year-over-year price is flat

Sale prices always fluctuate up and down through seasonal cycles, but prices have been consistently higher than the same month the previous year since the aftermath of the crash in 2008. This March, median sale price was the highest it has been this year, but about the same as it was last March.

This is a big change from the last two years, when homeowners made money by just sitting in their homes as market prices rose each month. This March was the first month that showed 0% increase over the same month the previous year.

This is surprising because listings that were definable as closing with multiple offers from comments in the listing increased in March, to 15%. We also know that properties sell with multiple offers that aren’t referenced in the listing.

It follows that the percent of list price received increased again in March, to 98.6%… not as high as last year when it was 102.7% but still a sign that market prices were on the upswing.

New listings, pending and closed sales all dropped in March 2023 compared to March 2022.

Days on the market increased by 62.9%, to 57 days compared to only 35 last year.

Inventory is the biggest driver of the market, and it has increased every month since last March. Last year, March inventory dropped 1% year over year. This March it increased 2.1% year over year.

You can see in the chart below the inventory hasn’t been falling the last couple years as it had been since its peak in 2007. Hopefully this is a sign that it is bottoming out and the supply of homes for sale will slowly increase, bringing us back to a more balanced market.

I have long been of the belief that months supply of inventory is the biggest indicator of the market, and it has been growing since 2021, this year with an area-wide supply of 1.4 months. Months supply of inventory (how many months it would take for the current supply of homes to be sold at the current rate) is still low at 1.4 months (the market is considered balanced at 5-6 months), but it is still 27.3% over last year at this time when the total supply was under one month. It continues to be a seller’s market, but weakening. The $250k-$350k price range has the lowest supply of homes at only 0.7 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.

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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