MANKATO — The sale of existing homes is booming in the Mankato region, having jumped 32 percent in the first quarter of this year compared to the same period last year.
“Things are up quite a bit. We’re not only selling houses in days, but in hours,” said Rich Draheim, president of the Realtors Association of Southern Minnesota.
The boom in sales and the dearth of new housing stock in recent years has caused a dilemma, however. There aren’t enough houses on the market.
There were 744 homes in the 10-county area actively listed through the end of May, half the number that were listed at the same time a year earlier.
Draheim said the fact there were few new spec homes built in recent years and the recent uptick in home sales accounts for the low housing stock. If people aren’t moving up into a newly built house, they’re not putting their existing house up for sale. He doesn’t see the situation changing anytime soon.
“There were few houses built for spec the last few years, but now they can’t put them in the ground fast enough. And the wet spring has slowed building.”
He said the shortage is particularly acute for homes in the $200,000 to $300,000 range.
Draheim said the average sale price of homes sold out of his office is $180,000. The average sales price for the region was $151,000 in May, up from $143,800 a year earlier.
Draheim said average sale prices have been held down some because of the sale of many foreclosed and short-sale houses that bring lower prices.
Interest rates have crept up some, from as low as 3 percent in December to about 4 percent today. Some analysts are predicting about 5 percent interest within the next year.
Draheim said the slight bump in interest rates may deter some younger home buyers from jumping into the housing market right now.
“It’s still a great rate, but younger people need to readjust to it. They’ve never been through the double-digit interest rates.”
April home sales in south-central Minnesota jumped 16 percent compared to April of last year, a far higher increase than the state average.
April home sales in Minnesota eked out just a 0.3 percent increase compared with last year.
But the median price of home sales in Minnesota rose 12 percent to $165,000, according to the Minnesota Association of Realtors. Declines in foreclosures and short sales, and growing competition for a dwindling number of listings is boosting prices in the state.
Across the U.S., sales were up 9.7 percent compared with last year to a seasonally adjusted annual rate of 4.97 million — the highest since November 2009, according to the National Association of Realtors. The median price rose 11 percent from last year, reaching its highest level since 2008.
The latest sign emerged last week as the Standard Poor’s Case-Shiller home price index posted the biggest gains in seven years. Housing prices rose in every one of the 20 cities tracked, continuing a trend that began three months ago.