Home sales in Minnesota last year slid to the lowest level in nearly a decade, but prices rose to a record high, according to a pair of end-of-year sales reports.
Statewide, prices grew 6.5% to a record median $326,300. Meanwhile, after peaking in 2021, closings fell 17.6% to their lowest level since 2014, according to Minnesota Realtors. New listings were down nearly 10%.
"The overall trend in 2022 was a return to normal market conditions," said Chris Galler, CEO of Minnesota Realtors. "Every year-over-year decline in closed sales we measured on a monthly basis was compared to the extraordinary activity of 2021."
A separate year-end report focused on the Twin Cities found the median price of all sales rose 6.6% to $362,500 in the 16-county metro. That's despite a 19.1% decline in closings, according to the Minneapolis Area Realtors' sales report released Wednesday.
Both end-of-year reports show that after a fast start to the year, buyers and sellers in the Twin Cities hit the brakes as mortgage rates — and home prices — rose through the latter months. Mortgage rates doubled within a year, vexing the average Twin Cities buyer now facing a monthly payment several hundred dollars higher than it would have been a few months earlier.
Buyers weren't the only ones who hit the sidelines last year. House listings declined double-digits as sellers worried about listing their house at a time when sales were slowing and price gains were easing.
Across the state, new listings were down about 10% over the previous year, leaving buyers with relatively few listings to choose from.
"There is still a shortage of homes for sale," said Jerry Moscowitz, president of the Minneapolis Area Realtors and an agent with Remax Results. "There are still people out there looking for houses."
Though there was a 16% increase in the number of active listings available to metro-area buyers at the end of the year, there were still only enough listings on the market to last a scant 1.4 months. The market is considered balanced between buyers and sellers when there's a five- to six-month supply of houses for sale. On average, houses sold in 31 days, only a few days slower than last year.
Moscowitz said that with more buyers than sellers in some areas, houses that are priced right and in tip-top condition are still selling quickly.
During just the past month, he's received multiple offers for more than the sellers were asking on four entry-level homes, all listed below $300,000.
"And all of these offers were within the first week," he said.
The difference? "Last year there might have been 12 offers, not two or three," Moscowitz said.
Similar trends played out across the state, though in most regions the shifts were less pronounced.
Galler said most of the 13 economic development regions tracked by the group saw smaller declines in annual closings than the Twin Cities metro.
The same was true of prices, which increased slightly more than in the metro.
Galler said that while higher mortgage rates have had a profound impact on buyers and sellers in the past year, the pandemic is still shaping the market.
Research shows that consumers are willing to buy a home that's much farther away from the one they recently owned. He cited National Association of Realtors research that shows the median distance a person moved last year was 50 miles — the highest ever recorded. By comparison, between 2018 and 2021, the median distance moved was just 15 miles.
"That is a significant shift when the bulk of people live in the metro area," he said. "Greater Minnesota has less dramatic swings both ways. Prices are generally lower, incomes generally lower and the economies more stable."