Although June saw a 4.9 percent year-over-year median sales price increase from $173,500 to $182,000 in the Twin Cities metro, low demand overshadowed those gains. The sales price reflects the mix of homes that were selling—many of which were closings from credit-motivated first-time homebuyers. The big shift occurred in the pending sales metric, which had a 40.4 percent year-over-year decline from June 2009. The previous record high was a 27.6 percent year-over-year pending sales declines and it occurred 4 years ago.
The price gains registered across the board, but the foreclosure category had the greatest price increase of 8.7 percent. Traditional and short sales saw year-over-year price gains of 3.6 percent and 3.1 percent, respectively. Looking a bit closer, the median sales price for traditional homes was $217,000, foreclosures were $125,000, and short sales were $152,000.
The traditional sub-market (non-foreclosure, and non-short sale) had a 41.5 percent pending sales decline while foreclosures had a 40.7 percent decline. Short Sales actually had an 11.0 percent increase in pending sales but comprised less than 1/5th of the market.
There were 3,465 signed purchase agreements in June, a decrease of 2,347 contracts from last June. Seller activity also slowed considerably, with 7,278 new properties coming onto the market. In terms of YTD figures, pending sales only decreased 8.5 percent while new listings posted a 2.1 percent increase.
Active listings remained fairly constant, with inventory checking in at 26,665 for June, a minor 1.8 percent increase over June 2009. The supply-demand ratio increased 46.9 percent to 7.44, primarily due to declining demand. This means that there are about 7.4 homes available per buyer for July.
The effect of the tax credit is becoming clearer with time. March and April enjoyed record-breaking performance at the cost of June and July (and possibly continuing into the future). In other words, the credit shifted would-be summer buyers forward. There aren’t enough buyers left to sustain March and April sales figures. A short-term demand spike was created at the expense of long-term market stability.
It is somewhat puzzling that demand is this flimsy considering interest rates are at 50-year lows. Until macro-economic indicators such as unemployment and job churn improve, the housing market isn’t likely to make large strides.
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