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February wasn't cool just in terms of the weather.

Home prices were also a bit chilled, flattening for the first time in several years after a double-digit decline in home sales in the Twin Cities.

Last month, the median price of all closings was $342,000. Though that was a record high for any February, it was just a $2,000 increase from last year, eking out just a

0.6% annual gain, according to a monthly sales report from a pair of trade groups representing Twin Cities real estate agents.

"We're in a place where buyers have more leverage, but lowball offers likely won't be successful," said Brianne Lawrence, president of the St. Paul Area Association of Realtors.

Since mortgage rates doubled last year, reluctant buyers and sellers have caused a log jam of listings. During February, there were 2,932 pending sales, 24% fewer than last year.

At the same time, there was a nearly comparable decline in new listings, though mostly among houses priced lower than $500,000. Listings for upper-bracket houses were up compared to last year.

Altogether, there were slightly more listings across all price ranges at the end of the month, leaving buyers with more options than last year. But first-timers like Carrin Baumgartner and Martin McNulty are still finding plenty of competition and not as many listings as they'd like.

The couple has been renting an apartment in Minneapolis for five years while saving for a down payment and started shopping last month.

"We wanted to wait out the crazy bidding wars that went on in the housing market during peak COVID times and with the low interest rates during that time," McNulty said

The pair shopped for a house under $385,000, preferably in the Windom Park neighborhood in Northeast Minneapolis where they'd been renting.

There weren't many options in their price range. And while higher rates were discouraging, both are committed to becoming homeowners.

"We wish that rates were a bit lower now, but we still feel pretty OK about it and can always refinance if they drop again," McNulty said.

Their agent, Lydia Kauppi, said they had an offer on a house in Northeast Minneapolis accepted for less than the sellers were asking. Though they won't close until the end of the month, and she can't reveal the sale price, Kauppi said they were able to do something many buyers weren't last year: Buy the house with a full-inspection contingency to be sure there aren't any major defects.

Like many buyers, McNulty and Baumgartner had some negotiating power on pricing. That's just one of the many reasons median prices haven't risen at the same pace as last year.

Most of the pricing pressure is related to higher mortgage rates rather than a glut of listings. Fewer buyers are able to qualify for a mortgage than last year, creating a ripple effect that's stifling sales throughout every price range. At the same time, many buyers can't afford to pay what they could last year, so that means many are making far less aggressive offers. That's true even for highly coveted entry-level listings garnering multiple offers.

Jerry Moscowitz, president of the Minneapolis Area Realtors, said in a statement people should remember their home hasn't necessarily lost value simply because the median price falls.

"The median reflects the mid-point where half the homes sell for more and half for less," he said. "If there are more luxury properties, new homes or condos selling, that all impacts prices. So does supply and demand."