Homebuyers gained a slight edge in May, but the Twin Cities remains a seller’s market

Home sellers in the Twin Cities still have a substantial advantage over buyers, but buyers gained considerable ground last month as listings increased and competition eased slightly.

Last month there was a nearly 16% annual increase in the number of homes for sale across the metro — the most for any May in at least four years, according to the Minneapolis Area Realtors. At the same time, buyers signed 5% fewer purchase agreements than a year ago, giving them more choices than they’ve had in many months.

Despite the decline in pending sales, closings — a reflection of deals signed in recent months — rose 10.5% over last year, causing the median price of those properties to increase 4.1% to $385,000.

Meanwhile, in a separate report, statewide prices rose to a record $350,000.

“While the market is undergoing corrections, it is not a balanced market yet,” Amy Peterson, president of the St. Paul Area Association of Realtors, said in a statement.

The housing market is considered evenly balanced between buyers and sellers when there are enough houses to last four to six months. It’s been years since that’s been the case. More listings, however, helped ease the logjam. Last month, there were enough houses on the market to last 2.3 months, a 21% increase over last year.

“Buyers need to remain both persistent and strategic ensuring their monthly payments align with their financial plans,” Peterson said.

The housing market in the Twin Cities has remained remarkably resilient despite record home prices and mortgage rates hovering around 7%. The May report shows that while there’s still pent-up demand in every price range, there are signs waning affordability is having an impact on some buyers.

On average, sellers received 100.1% of their list price last month, a slight decline compared with last year, but an indication that strong offers and bidding wars are still happening. Houses sold swiftly, averaging 40 days on the market. That’s slightly longer than last year.

New listings in the metro rose more than 3% during the month, but statewide sellers listed 1.7% fewer properties, according to a separate report from the Minnesota Realtors, which tracks sales in 11 economic development regions. Pending sales fell 5.7% statewide, marking the first time since September both metrics declined.

Closings in the state were up 10% — a higher margin than the Twin Cities metro alone.

In a sign of the impact of higher mortgage rates and a shortage of listings, pending sales fell in nearly all of those regions tracked with the Headwaters and East Central regions posting the only meaningful gains.

After a slight dip in recent weeks, mortgage rates are now only slightly higher than they were last year at this time. The average 30-year fixed-rate mortgage was 6.95% as of June 13 compared with 6.69% last year.

The Twin Cities mirrors national trends. A U.S. report from Zillow shows house listings in the Twin Cities increased 18% from April to May — the eighth-largest bump among major metros.

“While it’s true that each area and even market segment is unique, there are still some common threads,” said Jamar Hardy, president of Minneapolis Area Realtors. “Rising inventory is one of those themes, yet those shopping for homes shouldn’t assume we’re suddenly in a buyer’s market because we’re not.”