Home sales slowed in 2023 to a 12-year low, but are expected to recover as interest rates fall.

By volume, home sales in the Twin Cities metro area reached their highest level in 20 years in 2021. Last year, they plunged to their lowest level since 2011.

Single-family home sales fell 20%, and even expensive but attractive new construction – once a hot spot in the real estate market – fell 3.9%. Overall, pending sales fell 15% in 2023, according to three real estate agent associations serving the 16-county metro area and western Wisconsin.

This doesn’t mean prices have fallen or demand has fallen flat. In fact, high interest rates, rising prices and shortages of inventory have made 2023 a tough year for homebuyers, especially first-time buyers who have looked for deals but come up short. .

Nonetheless, December saw an 8.7% increase in pending home sales as mortgage interest rates declined somewhat, and positive forecasts for interest rates and the economy in general have left real estate agent associations predicting a faster pace for home sales in 2024.

“After more than a decade of underbuilding, we estimate we are nearly 106,000 units short of what is needed to meet existing demand,” Geri Theis, president of Minnesota Realtors, said in a video update released at the end of January. “Challenges persist, but Minnesota appears well-positioned to see the housing market rebound this year. »

Median prices

The median home price in the 16-county Twin Cities metro area hit a record $368,000 last year, up 1.4 percent from the year before and well above from the 2019 median of $280,000, according to the joint release from Minnesota, Minneapolis and St. Paul. Real estate agent associations.

“Surprisingly, throughout the past year, we still saw great deals and relatively quick market times,” Jamar Hardy, president of Minneapolis Area Realtors, said in the Real Estate Market Video Update. Twin Cities published January 29. 12th consecutive year of increase (in home value), which means significant growth in equity for homeowners.

Amy Peterson, president of the St. Paul Area Association of Realtors, noted…

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