As the year winds down and we look forward to the holiday season, we begin taking stock of 2017 and looking ahead to what to expect in the coming year.
Key insights from last month*
- New listings: +3.1%
- Median sales price: +6.1 — $246,000
- Pending sales (signed purchase agreements): +3.9%
- Average days on market: -14.8% — 52 days
- Number of homes for sale: -18%
The consistent story throughout 2017 has been very low inventory of homes for sale in many areas, especially in the starter home price range, where demand is the highest. This lack of supply has stymied home sales, which are on track to remain about flat with last year, which was also a very active real estate market.
The market has shown continued strength in sales prices. In October, the median sales price was $246,000, up 6.1 percent over last year. Home prices have now risen for more than 5.5 years.
Economic check up
- Minneapolis-St. Paul area unemployment rate: 2.9% (4.1% nationally).
- Average 30-year mortgage rates continue to hover around 4% for a 30-year fixed loan.
- A strong local economy with job growth is encouraging for homeownership.
- Rent prices continue to rise as only 2.5% of apartments are vacant.
It’s all about the listings
In October, new listings were up 3.1 percent over last year. Adding more listings and more new construction to satisfy buyer demand will be key to continued market health in 2018. Listings are most needed in the starter home price brackets, where the inventory pinch has been greatest.
- New listings for homes under $250,000 were down 10.6% from last year.
- New listings for homes $250,000-$500,000 were up 20.2% over last year.
What to watch for
A factor that can contribute to the vitality of the housing market is public policy. The National Association of REALTORS® has said that eliminating the mortgage interest deduction and/or state and local tax deductions may put barriers in place for homebuyers. However, this would likely only affect real estate activity in the short term as owning a home means much more to people than a yearly tax deduction.
*All data courtesy NorthstarMLS for the 13-County Twin Cities metro area.