Market Firms Up . . . A Bit
In his e-mail to realtors this week, the CEO of the local board of realtors notes a significant drop in the number of new listings:
The signs are early and nascent, but there are some promising early indicators that the Twin Cities housing market is beginning to correct and pull back from its two year-beeline in the buyer’s favor. While affordability, interest rates and overall supply are still attractive, home sellers are cutting back on new listings substantially in 2008.
For the week ending April 12, there were 2,156 new listings, down a full 20.1 percent from the same week last year. That’s the fifth week in the last six that we’ve seen double-digit percentage drops from 2007 activity. Newly signed purchase agreements (pending sales) are still behind last year also, posting a 3.8 percent decline.
While our market still faces a long road ahead to full recovery, the recent reduction in new supply is a positive beacon on the horizon and undoubtedly welcome news for home sellers.
Minneapolis Area Association of REALTORS
Like employment statistics, trends in housing supply can be misleading. For example, economists note that the current unemployment rate (just over 5%) omits all the workers who have stopped looking for work. As a result, the economy is likely weaker than the reported rate suggests.
Similarly, a drop in new listings undoubtedly reflects would-be sellers’ take on the current market. Instead of taking their chances in a (very well publicized) buyer’s market, they’re biding their time, waiting for better selling conditions. Until the number of pending and closed deals start to show meaningful increases, it’s too soon to announce an overall market bottom.
In the meantime, the drop in new listings is certainly a positive development, if only because it shows market processes at work — namely, higher prices elicit more supply and check demand, while lower prices shrink supply and stimulate demand.
Now if only oil prices worked that way . . .