March provided a critical data point on the road to recovery. For the first time since October 2010, the median sales price of Twin Cities homes was higher than a year ago. The 6.4 percent gain was the largest year-over-year median price increase since a tax-credit-driven April 2010. After accounting for the growing square footage of homes selling, price per square foot increased for the first time since June 2010.
Prices weren't the only metric to show improvement in March. Pending home sales were up 20.4 percent and are already higher than any month in 2007, 2008 or 2011. Months supply of inventory fell nearly 40.0 percent to 4.6 months – the lowest reading for any month since January 2006. Compared to the year prior, sellers are seeing a greater share of their asking price in less time as competition and oversaturation have both eased significantly.
A warm winter certainly helped boost buyer activity, but low interest rates, affordable prices and a sense of urgency caused by tightened inventories were also factors. The number of homes for sale continued to drop, down 27.5 percent from last year to 17,081 active listings – the lowest inventory reading for any month since January 2004.
Traditional sales surged 33.2 percent, while foreclosures slid 13.2 percent and short sales increased 5.0 percent. Distressed homes made up 34.6 percent of all new listings and 43.7 percent of all pending sales, the smallest shares since July 2008 and April 2010, respectively.
The overall median sales price was up 6.4 percent to $149,000. That reflects a shifting market share in terms of sales volumes and not price gains in the traditional, foreclosure and short sale segments. In fact, traditional prices fell 1.2 percent to $195,000; foreclosure prices fell 2.8 percent to $105,000; and short sale prices fell 3.8 percent to $128,950.
The seller side of the equation continues to improve. On average, homes tended to sell in 144 days compared to 160 last March. Sellers received an average of 92.1 percent of their asking price compared to 88.7 percent last March. That marks the sixth consecutive month of decreases in market times and the eighth consecutive month of increases in the ratio of sales price to list price. Seller confidence will play a key role in filling the supply pipeline moving forward.