As mortgage rates rose in the second half of 2022, home sales in the Twin Cities fell.
Minneapolis Area Realtors and the St. Paul Area Association of Realtors released their annual report on Wednesday. The two organizations serve a 16-county area in the Twin Cities and western Wisconsin.
Here are some important points:
As mortgage rates rose, sales fell
Among the big data in the report is that home sales in 2022 were the lowest since 2014. That number is in stark contrast to 2021, when home sales fell to a 20-year high.
The report indicates that mortgage rates increased significantly in the second half of 2022, from 3.5% to more than 7%.
“It felt like the housing frenzy continued through the spring and summer, but the (Federal Reserve) poured cold water on that in a hurry because of the high interest rates. price,” said Brianne Lawrence, President of the Saint Paul Area Association of Realtors.
The increase in home sales in 2021 was also compared to a 20-year low in home sales, according to the report. In 2022, while sales fell, production rose 16.2%, reaching 5,914 units at the end of the year.
The consumer market is slow
In 2022, buyers listed a total of 68,006 properties on the market, a decrease of 10% from 2021.
And when sales began to slow, buyers began to accept lower offers. In December of 2022, sellers accepted 96.3% of their list prices, which marked the lowest price since 2016. It also took longer for those homes to sell, and the number of days on the market to increase by 10.7% in 31 days.
Home prices continued to rise, reaching $362,500. But, the rate of increase was slower in 2022 compared to 2021.
But Jerry Moscowitz, President of Minneapolis Area Realtors, said that stabilizing the price of the weather can make the market more competitive in the spring and summer.
“I went from reviewing more than a dozen offers with my clients to advising them about patience while on the market within one year,” Moscowitz said. in an explanation.
“Inflation will be able to turn a corner and prices can moderate in the summer. If that happens, the demand will rise and we will go right back to a competitive market and price hikes demand is greater than supply.
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Not all home listings are the same
While home sales are slowing in many areas, rates vary by area. Sales of single-family homes fell 19.2%, while condos fell 20.3% and townhomes fell 17.8%.
But the newly built houses did better overall. Sales of previously owned homes fell 20.1%, compared to a decrease of 8.3% for new homes.
And the market for luxury homes was better than others. Homes sold for more than $1 million rose 7.5%, reaching a record high.