Twin Cities Housing Market: September

The Twin Cities real estate market was active in September. Lower mortgage rates and the looming deadline for the $8,000 federal tax credit has first-time home buyers rushing to find good deals.

Pending home sales rose 23.5% over a year ago, with 4,986 signed purchase agreements, according to the Minneapolis Area Association of Realtors. It is the 15th consecutive month of year-over-year pending home sales increases. Pending sales are 75.6% higher than they were in September 2007. Closed sales in September were flat year-over-year.

The first-time home buyer credit, devised to help jump-start the housing market, is set to expire Nov. 30. Buyers must close on their home on or before that date to qualify and time is running out. Buyers should allow at least 45 days between finding the home to closing!

While median sales prices have increased from the $150,000 to $155,000, prices over the summer and fall have hovered in the $170,000 to $175,000 range. Last month's median sales price of $170,000 represents a 2.9% dip from August to September and a 10.5% drop year-over-year. The last time the median sales price was around $170,000 was in the second half of 2001.

The increased sales activity and increasing demand is helping sellers out. There is a 6.6-month supply on the market, compared to 9.5 months at this time last year. The National Association of Realtors says optimal housing inventory is six to seven months and directly attributes the improvement to the tax credit. There is less than five months' supply in the under-$190,000 price range, which tends to be closer to the prices range of first-time buyers.

There is concern that the housing market will cool after the credit expires. The housing industry is lobbying Congress to extend it into 2010.

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