June 2022
Rising inflation, soaring home prices, and increased mortgage interest rates have
combined to cause a slowdown in the U.S. housing market. To help quell inflation,
which reached 8.6% as of last measure in May, the Federal Reserve raised interest
rates by three quarters of a percentage point in June, the largest interest rate hike
since 1994. Higher prices, coupled with 30-year fixed mortgage rates approaching
6%, have exacerbated affordability challenges and rapidly cooled demand, with home
sales and mortgage applications falling sharply from a year ago.
New Listings in the Twin Cities region decreased 6.7 percent to 7,901. Pending Sales
were down 18.4 percent to 5,544. Inventory levels rose 9.8 percent to 8,020 units.
Prices continued to gain traction. The Median Sales Price increased 8.6 percent to
$380,000. Days on Market was up 5.0 percent to 21 days. Buyers felt empowered as
Months Supply of Homes for Sale was up 23.1 percent to 1.6 months.
With monthly mortgage payments up more than 50% compared to this time last year,
the rising costs of homeownership have sidelined many prospective buyers.
Nationally, the median sales price of existing homes recently exceeded $400,000 for
the first time ever, a 15% increase from the same period a year ago, according to the
National Association of REALTORS®. As existing home sales continue to soften
nationwide, housing supply is slowly improving, with inventory up for the second
straight month. In time, price growth is expected to moderate as supply grows; for
now, however, inventory remains low, and buyers are feeling the squeeze of higher
prices all around.
– SAINT PAUL AREA ASSOCIATION OF REALTORS®
