The Twin Cities housing market continued to shuffle along in August much the way it did in July. As a result of buyer demand being displaced by the federal tax credit—which ended April 30 and moved the traditional Minnesota summer selling season to spring—sales activity fell sharply in August which caused inventory to grow. Predictably, this placed downward pressure on prices. Good news for buyers; more challenges for sellers.
Pending sales in August were down 30.7 percent compared to last year, which is the smallest decline in three months. Due to weakened buyer demand, inventory grew to 27,638 active listings, an increase of 8.8 percent over last year. That's the largest inventory spike since February 2008 and the third consecutive month of progressively increasing year-over-year inventory growth. After seven consecutive months of year-over-year price gains, the $172,165 median sales price was a 1.6 percent decrease from last year. Prices simply had to respond to suppressed demand and growing inventory.
Digging deeper, traditional sellers (nonforeclosure and non-short sale) saw a 9.2 percent price increase to $227,000, foreclosure prices dropped 2.5 percent to $115,000 and short sales increased 2.5 percent to $145,000.
The traditional and foreclosure market segments had a significant decline in pending sales activity—32.1 percent and 23.9 percent, respectively—while short sales posted a minor 5.1 percent decrease.
There were 3,394 signed purchase agreements in August, a decrease of 1,503 contracts from last August. Seller activity also slowed, with 6,810 new properties coming onto the market. By year-to-date (YTD) figures, pending sales decreased 15.6 percent from last year. New listings posted a 0.2 percent YTD decrease compared to last year.
Foreclosure inventory swelled 20.1 percent, while traditional inventory only grew 3.2 percent. For the second month in a row, negotiations moved back toward the buyer as sellers received an average of 91.1 percent of their original list price at sale—a 3.2 percent drop from last year at this time.