Home sales in the Twin Cities fell double-digits last month, but sellers nabbed more than their asking price in the midst of a deepening shortage of house listings, pitting house-hungry buyers against one another.

During May, there was an 18% annual decline in newly listed houses, according to a monthly report from the Minneapolis Area Realtors. That left buyers with 9% fewer listings to choose from at the end of month and a sense of urgency.

With more buyers than sellers in the metro, on average, listings sold for 101% of the asking price.

"Buyers have been aggressive price-wise but not waiving inspections and some of those other contingencies," said Mitra Rahimi, a Twin Cities agent. "It has been really crazy for buyers."

Realtor Mitra Rahimi said buyers have still been aggressive price-wise despite no longer going to extreme lengths like waving inspections.
Shari L. Gross, Star Tribune
Realtor Mitra Rahimi said buyers have still been aggressive price-wise despite no longer going to extreme lengths like waving inspections.

Rahimi said with dwindling options, especially for buyers in the $200,000 to $600,000 price range, more than 80% of her listings fetched more than one offer. That includes a four-bedroom, three-bathroom rambler in Eden Prairie, which had 28 showings and eight offers within two days of listing last month.

"There are still not enough homes," she said. "There's been a lot of competition for buyers."

The house was professionally staged, freshly painted and in tip-top condition, all prerequisites for garnering so much demand, Rahimi said.

"That house truly was like in the perfect niche," she said. "And it had all the bells and whistles."

Home prices in the Twin Cities have risen this spring. But compared to last year, they've been flat, mostly because of higher mortgage rates. The median price of all sales last month was $370,000, down 1.3% compared to last year. That decline follows several months of stable prices after home prices eked out a small, single-digit gain during January.

"A lot of people are locked in at low rates," Rahimi said. "So they're updating their houses or holding to see what happens. And that affects whether people want to sell or even buy."

After a three-week climb, mortgage rates have slid in recent weeks. Freddie Mac's most recent weekly survey shows the 30-year fixed-rate mortgage (FRM) averaged 6.69%. A year ago, it averaged 5.78%.

"I think for the foreseeable future, we're going to have low inventory because of those kinds of rates," Rahimi said. "And they're just not building like they used to."

The inventory shortage in the Twin Cities and beyond is partly from a downturn in homebuilding, which slumped in the Twin Cities during May but not nearly as sharply as earlier this year, according to a monthly report from Housing First Minnesota, which tracks building permits throughout the metro. It showed builders pulled enough permits to build 487 single-family homes, 13% fewer than last year.

What's happening locally mirrors national trends. On Thursday, Redfin said the number of homes for sale across the country through the past four weeks was down 6% compared with last year, the biggest decline in 13 months. New listings fell 23%, the 10th consecutive month of decline. That's left buyers with 39% fewer homes for sale than five years ago.

"It's important to keep things in perspective," said Jerry Moscowitz, president of the Minneapolis Area Realtors. "The median price simply reflects the middle or typical home selling, but every home is unique. In some ways, this pause gives buyers some room to be more selective on the listings that really stand out."