Low inventory and higher mortgage rates are to blame for the lowest level of existing home sales in the Twin Cities in more than 20 years.
That's according to the latest data from Minneapolis Area Realtors and the St. Paul Association of Realtors.
At the same time, frustration in the traditional market has buyers and sellers looking more and more to new construction. James Vagle is CEO of Housing First Minnesota.
"At the end of 2023 new builds were up to over 30% of total transactions," Vagle says. "To give you a comparison, in 2010, they were between 5% and 10%."
But, Vagle says affordability is the largest challenge facing all housing right now. That's due to a persistent undersupply and increased costs.
He adds they'll be asking the legislature for help with outdated approval processes and zoning regulations during the upcoming legislative session.
Nationally, the recent pullback in mortgage rates is spurring more homeowners to put their homes up for sale, though the increases so far have been too modest to return the housing market’s inventory of available properties back to pre-pandemic levels.
The number of active listings, a tally of U.S. homes on the market that excludes those pending a finalized sale, climbed 4.9% to 714,176 in December from a year earlier, the biggest annual increase since June, according to data released by Realtor.com earlier in January.
A big part of the increase was due to a 9.1% jump in new listings, or properties that made their market debut in December, which posted an annual increase for the second time after 17 months of declines.
As is typically the case, active listings declined in December from the previous month, falling 5.5%. But the drop was less than the typical decline of 6.8% to 13.2%, Realtor.com said.
“It’s definitely a step in the right direction for the housing market,” said Danielle Hale, Realtor.com’s chief economist. “But we’ll need to see this repeated not just in November and December, but into January and February in order to really turn around the inventory situation in the housing market.”
The Associated Press contributed to this story.