August was a blockbuster month for home sellers across the 16-county metro, despite the global pandemic and a coming presidential election, which typically puts buyers on edge.
Home buyers signed nearly 7,200 purchase agreements last month, 20% more than last year at this time and the most for any month since 2004, according to the Minneapolis Area Realtors (MAR).
Much of that demand last month was motivated by record low mortgage rates, but some of it reflected pent-up demand from the government shutdown earlier this year, pushing the peak buying season into the fall.
“Buyers were truly out in force last month,” said Linda Rogers, MAR president and a Twin Cities sales agent, in a statement. “The gains were widespread, with both urban and suburban locations appealing to home buyers.”
Sellers were far less active this summer, creating an unusually competitive late-season market in many parts of the metro. New listings last month were up only slightly compared with last year, and with buyers outpacing sellers in some parts of the metro — especially the suburbs, as the median price of all closings during the month increased nearly 10% to $315,000. Those closings reflect deals that were signed a month or two ago.
Buyers have been unusually motivated this summer by low mortgage rates, which dipped to record lows early last month. The average 30-year fixed-rate mortgage remains below 3%, boosting buying power and offsetting double-digit price gains.
Those buyers, however, don’t have many options. At the end of August, only 8,756 properties were on the market, nearly one-third fewer than last year. At the current sales pace there are only enough listings on the market to last 1.7 months, a 32% decline from last year. The market is considered balanced when there’s a five- to six-month supply of listings.
On average, houses sold in 39 days, a slight decline and a new low, and sellers received 100.3% of their original asking prices — matching an 18-year record high.
“People are searching high and low for properties that meet their needs,” said Patrick Ruble, president of the St. Paul Area Association of Realtors. “Attractive rates and a lack of supply means homes won’t last long on the market.”