Warm weather helps housing inventory in Twin Cities

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Much like the weather this past weekend, the housing market seems to be warming up with a noted increase in inventory and as well as a decrease in the number of days on the market, according to a joint report released Monday by the Minneapolis Area Realtors and St. Paul Area Association of Realtors.

Homes spent about 54 days on the market in March compared with about 57 days last year, according to the report. While still a far cry from the ideal four- to six-month supply of inventory, there is about 1.8 months of supply on the market compared with 1.4 months this time last year.

Jamar Hardy, president of the Minneapolis Area Realtors, said in an interview that this is the time of year when the market starts to bring both buyers and sellers out and certain metrics start trending in better directions.

“Late summer and early fall, we were really telling consumers, you’ve got to be prepared, if you sell right now it might sit on the market a little longer,” Hardy said. “Ultimately we’re seeing the market shrink a little bit, which I think leads into the seasonal effect of the spring market being here.”

Hardy said the spring and summer market usually peaks somewhere around the Fourth of July weekend. Hardy said an economist for the National Association of Realtors said that an interest rate ease-up is likely to come in the third or fourth quarter of this year, meaning that easier rates are likely to miss the spring and summer market.

“If rates do trend down a little bit — let’s just say Q3 — I think we might see a longer market obviously extending that peak out a little bit,” Hardy said.

The report said “supply levels are too low for prices to fall, but rates are too high for prices to rise much,” a characterization of the market that was used in both the January and February home sales reports. The median sale price of a home in March was $366,000, up from $357,700 in February and $350,000 in January.

Compared with March 2023, purchase agreements were up 7.8%, according to the report, though closed sales were down 0.9%. Among those sales, single-family homes saw a 12.8% increase. Condo sales, on the other hand, saw a decrease of 15.6% compared with last year, and townhomes were down 1.2%.

Sales of previously owned homes were up 8.9% from last year, while new construction sales were up 2.3%. This is a bit of a slowdown for new construction, as February saw a 26.6% increase in new construction sales over the prior year.

Hardy attributed this to the winter incentives that many builders offer for newly constructed homes, which can lower the monthly payments for the buyer.

“I do think that proposition gets more expensive during the warm weather months, and you see the savings when it gets a little cooler,” Hardy said.

RELATED: New home listings up 34.5% since last year in Twin Cities metro