After median home prices hit a record high this summer in the Twin Cities, sales activity started to slow last month, according to data released Monday by the Minneapolis Area Association of Realtors (MAAR).
 
Entry-level homes, which often spend little time on the market and sell at a high price, instead experienced a loss in closed sales in September. The change was a sharp departure from interest the category had received all year from prospective homebuyers.
 
MAAR president-elect Kath Hammerseng attributed the drop to a lack of inventory and buyer disinterest over what’s available. “For homes above $250,000, the market is better supplied, less competitive and is still expanding,” she said in prepared remarks. “It’s really the bottom-end of the market that’s feeling the most inventory and therefore sales pressure.”
 
Pending sales overall dropped for the third consecutive month—approximately 1.7 percent in September.
 
Additionally, the number of homes for sale dipped by nearly 17 percent compared to last year. Inventory now stands at roughly 12,500 homes.
 
Months of supply—a real estate metric measuring how long it’d take for inventory to bottom out without additional listings—is down to just two-and-a-half months in the Twin Cities, MAAR said. Typically, five to six months is considered a balanced market.
 
Despite having limited options, buyers are still bidding high and fast. Homes, on average, sold for more than 98 percent of their original list price and in 50 days (roughly 12 percent faster than last September), according to MAAR.
 
The median sales price last month rose by more than 7 percent from last year to $246,900.
 
According to MAAR president Cotty Lowry, hopeful homebuyers may be feeling disheartened by their chances of landing a home, and are instead taking a break from home searching.
 
“There’s no other way to say it: sentiment out there may be starting to change,” he said in a statement. “Sometimes shifting markets can bring out a lot of pessimism, which can become a self-fulfilling prophecy.”
 
He added: “The likely scenario may be a brief pause in the trend we’ve seen. That’s not a bad thing, since it [will allow] incomes a chance to catch up and [take] the intensity down a notch.”