June was another record-breaking month for home sales in the Minneapolis/St. Paul area. Interest rates slid all the way back below 6% for a 30 year, fixed rate loan of $150,000 or more. Even though the Fed raised interest rates this month, that rate is not directly tied to the mortgage market. According to the Mortgage Bankers Association, by this time next year rates are projected to be at about 7.1%. With the rates still so low, I expect that July and August will be fairly brisk with sales, though September and beyond promise a slowdown in activity due to seasonal trends.
Even as sales are at and near all-time highs, the number of homes for sale are also high. There are currently more than 23,000 single family homes for sale on the MLS right now. That’s more than double what it was five years ago and up double digits from last year as well. This is a boon for buyers as it allows for more buying decisions. Sellers are having to realize that most homes no longer sell in the first week on the market. In fact, I’m seeing price reductions on many homes for sale more than 30 days. This is not a sign of a “price bubble burst” but rather a very normal market. Sellers that want top dollar will need to spend more time “staging” their home for sale so that it shows well against the increased competition.