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For 12 consecutive weeks now, the number of homes for sale in the Twin Cities housing market has been higher than it was a year ago, and the gap between this year's inventory and last year's inventory at the same time has been steadily growing. There are currently 27,784 homes for sale, up 8.1 percent from this time in 2009. Inventory is not growing due to an influx of new sellers putting their homes on the market. Rather, its growing due to a drop in buyers who once were absorbing supply.

For the week ending August 21, there were 601 signed purchase agreements, down 40.6 percent from a year ago. That's the 15th consecutive week of significant declines compared to a year ago.

With supply growing and fewer buyers to purchase it, home sellers can expect a challenging fall and downward pressure on home values. Motivated sellers who want to move quickly may have to pursue aggressive pricing to attract buyers.

For 12 consecutive weeks now, the number of homes for sale in the Twin Cities housing market has been higher than it was a year ago, and the gap between this year's inventory and last year's inventory at the same time has been steadily growing. There are currently 27,784 homes for sale, up 8.1 percent from this time in 2009. Inventory is not growing due to an influx of new sellers putting their homes on the market. Rather, its growing due to a drop in buyers who once were absorbing supply.

For the week ending August 21, there were 601 signed purchase agreements, down 40.6 percent from a year ago. That's the 15th consecutive week of significant declines compared to a year ago.

With supply growing and fewer buyers to purchase it, home sellers can expect a challenging fall and downward pressure on home values. Motivated sellers who want to move quickly may have to pursue aggressive pricing to attract buyers.

Although we always knew that membership was a trailing indicator of market activity, this chart illustrates that there is a far greater correlation than we first suspected. The seasonality effect in home prices is also mirrored in the membership numbers with surges in the warmer months and decreases in the colder months. Buyer activity—as measured by the closed sales trendline—seems to have peaked about two years before prices did. The first tax credit could have slowed the decline in member numbers as prices received a boost in Summer of 2009, although that could be purely coincidental.

Click here for the the full Weekly Market Activity Report

 
The inventory of homes available in the lower price ranges is growing
dramatically from last year. With the number of new listings in these segments
outgrowing sales, the number of available homes has grown. For instance, below
$120,000 the current Months Supply of Inventory of 5.2 is a jump of 52.6 percent
from last year at this time.

Inventory in the higher price ranges is now dropping as sellers have pulled back
on their new listings. All price ranges above $250,000 now have fewer homes for
sale than they did a year ago.

Home prices are softest in the condominium category, where the average Price
Per Square Foot has dropped 13.9 percent in the last year.

Click here to view the full Housing Supply Outlook

The Twin Cities housing market has found itself in a bit of a holding pattern in recent months, and July is no exception. The $175,000 median sales price was a 2.3 percent increase over July 2009. Pending sales in July were down 37.6 percent compared to last year, which is certainly less than ideal but expected. Due to weakened buyer demand, inventory grew modestly to 27,249 active listings, an increase of 5.4 percent over last year.

Demand has stabilized and should slowly return in the coming months. We hope that it returns to the market before prices have a chance to respond to the growing inventory.

Traditional sellers enjoyed a 5.0 percent price increase to $222,500, foreclosure prices remained flat at $119,000 and short sales posted a 3.5 percent price gain to $147,000. The traditional and foreclosure submarkets had a significant decline in pending sales, while short sales actually had a small increase.

There were 3,226 signed purchase agreements in July, a decrease of 1,948 contracts from last July. Seller activity also slowed, with 6,926 new properties coming onto the market.

All active listings experienced a minor spike. The supply-demand ratio increased 63.5 percent to 8.64, primarily due to declining demand and not a surplus of new product. This means that there are about 8.6 homes available per buyer for August.

Although the tax credit ended over three months ago, its negative externalities are finally beginning to pass. March and April enjoyed a big boost in sales performance at the cost of May, June, July, and most likely several additional months.

The economy is currently driving the housing market and not vice versa. The housing sector once generated corresponding construction, manufacturing and other jobs which in turn fueled economic growth. That hasn't been the case of late.

For the week ending July 31, New Listings in the Twin Cities region were down 4.3 percent from last year, with 1,566 new properties coming onto the market. Pending Sales were down 34.3 percent from a year ago, as 651 purchase agreements were signed.

Over the last three months, there have been 13.4 fewer new listings than there were during the same period a year ago and 38.7 percent fewer pendings. This means increasing inventory. There were 27,627 Active Listings for Sale as of August 9, up 6.6 percent from the same point in 2009.

The growth in inventory, combined with slowed sales demand, means that the number of homes available per buyer in August has jumped to 8.64, up dramatically from the mark of 5.28 seen a year ago.

Click here for the the full Weekly Market Activity Report

Whether May or June or July, we're finding it difficult to report anything new to you for the warm weather months of 2010. Week-in and week-out, we're showing a recurring pattern of behavior in the Twin Cities housing market, and the week ending July 24 isn't much different. Pending Sales are at 628 for the week, down 37.8 percent compared to last year, and Active Listings for Sale are at 27,661, up 5.4 percent.
 
These percentage changes represent a bit of a holding pattern. In fact, we've been here since the expiration of the tax credit. There was a minor bump in Active Listings but it wasn't sufficient to convince us that we're heading toward another oversupply situation.
 
Days on Market and Months Supply of Inventory continue to indicate a favorable market for home buyers. But with interest rates remaining at historic lows, there appears to be no sense of urgency. We may see a minor kerfuffle in the market before the school year begins, but 1,000-plus pendings per week in August doesn't seem likely, let alone 800.

Click here for the full Weekly Market Activity Report