Twin Cities Housing Market: 2018 - February

Twin Cities Housing Market: 2018 - February

  • Nick Leyendecker
  • 02/27/18
Here is a link to the live data. You can track mortgage interest rates here.
2018 has begun with some extreme volatility in the bond market which has resulted in a 10% rise in mortgage rates year to date. Rising mortgage rates have a negative impact on home affordability or spending power, which ultimately can put downward pressure on demand in the purchase market.

With the Federal Reserve having discontinued their treasury bond acquisitions, (Quantitative Easing) a program that was designed to stimulate the economy, announcing their intentions to begin liquidating some of their bond positions, stating their intentions to continue to raise the federal funds rate, and with the treasury needing to create and auction new bonds to fund ongoing deficits, the conditions appear to be set for a correction in the bond market which would result in a rise in mortgage interest rates.

Now I will get into the housing market data starting with home inventory. The number of homes for sale in the twin cities remained at a historical low in January at just over 7,000 homes for sale.

New listings were significantly up from December with 4,041 new homes hitting the market in January as expected.

Pending sales were up about 4% from December with just over 3,100 homes falling under contract in January which was also to be expected.

The median home price fell a marginal 2% in January from December which was expected, but is still up 10% year over year and is up 50% from 5 years ago.

Buyer activity in February may or may not be dampened by the increase in mortgage rates but nonetheless has been on the rise in February. In some segments, prices have already begun their seasonal move up with many homes selling fast, with multiple offers and for above list prices.

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