Home sales and new listings were down by double-digits in the Twin Cities last month.
And with more buyers than sellers in some parts of the metro, median home prices increased another 7% to $375,000, according to a monthly report from the Minneapolis Area Realtors.
"Aspiring home buyers still face competition and multiple offers, just slightly less so than the last couple years," said Mark Mason, president of the St. Paul Area Association of Realtors. "So while the market has rebalanced slightly, it still favors sellers."
Rising mortgage rates and record home prices have knocked many buyers to the sidelines. This shift has left both buyers and sellers adjusting and wondering how to time their moves.
"It was both nerve wracking and intriguing as we waited to see what would happen," said Stephanie Hanson of Rosemount, who, with husband Ryan, put their house up for sale.
During July, there was a 23% decline in pending home sales and a 17% decline in new listings. That left buyers with only 8,694 listings to choose from at the end of the month, only slightly more than last year at this time.
At the current sales pace, there were only enough houses for sale to last 1.7 months, though that was a slight increase compared with last year.
Sellers are still getting strong offers, but not as many as they might have last year. On average, sellers got 101.5% of their asking price, down from 104% a year ago. And the pace at which houses are selling is slowing only modestly.
Houses that sold in July found a buyer in just 22 days on average, three days slower than last year.
The Hansons bought their split-level in Rosemount just 21⁄2 years ago and were being forced to sell it because of a job opportunity in South Dakota. Stephanie Hanson said the shift in the market made them nervous about having to sell it so quickly after buying it.
A market analysis showed that the Hansons' house, which was built in 1987, was likely to fetch at least $380,000 even though they paid only $290,000 in March 2020.
Their agent, Cheryllyne Vaz, said she was confident as long as the Hansons got the house in the best condition possible. She promoted the house on social media, made a video and distributed hundreds of postcards and flyers.
"It's critical for a house to be staged perfectly as a seller has just one chance to grab a buyer's eye," Vaz said.
She said she hosted five open houses but got very few visitors. But after scheduling only four showings and only a few days on the market, they received an offer from a buyer who was willing to pay more than the asking price and forgo an independent home inspection.
"It's an interesting time," said Hanson. "Everyone is a little bit hesitant about what to do if the market keeps changing."
Being a buyer was no less stressful. They were uncertain, she said, about how aggressive to be when making an offer on a house in Brookings, S.D. Ultimately, they closed on a house after offering the seller slightly less than he was asking.
"It's still competitive," she said about Brookings, a college town of just 25,000. "We felt that as a buyer we had to be ready make an offer at a moment's notice."
Buyers and sellers are still adjusting to the impact of mortgage rates that have nearly doubled since the beginning of the year. Last Thursday, Freddie Mac said the 30-year fixed-rate mortgage averaged 5.22%, up from 4.99% the week before.
Home sales nationwide fell in July for the fifth month in a row, increasing the likelihood that house prices likely will continue to rise.
Redfin, an online real estate brokerage, said last week that new listings of homes for sale nationwide dropped 12% and pending home sales fell 16%.
Despite the decrease in new listings, overall housing supply nationwide continues to grow, with the total number of homes for sale across the country up 4%.
In the Twin Cities, this shift has been happening slowly. Home buying has softened for 11 of the past 12 months, according to MAR. The biggest declines in sales occurred among the least-expensive houses.
The biggest increase in sales have been in the upper bracket. Sales of properties priced at more than $500,000 have increased nearly 10%. That includes a downtown Minneapolis penthouse condo that closed in late July at the full list price of $6.99 million. It was on the market just 22 days.