Twin Cities home sales drop 5%, interest rates and inventory issues persist

(FOX 9) - Minnesota Realtors say home sales are down 5.1% in the Twin Cities and 4.9% statewide for the month of January. Experts point to high interest rates that won’t budge.

Interest rates still a burden

What we know:

The median home prices in the Metro are $370,000, with interest rates averaging 7%, according to Minnesota Realtors. Experts say current homeowners feel tied to their homes because their current interest rates average around 2.4% to 4.5%.

Minnesota Realtors add new listings rose 8.3%, but there is still a shortage of homes for sale.

What they're saying:

"For a buyer, several years ago, they were probably paying closer to 12 to $1,500 a month for their payments, and now, with the interest rates being higher, it's $2,200 a month for their mortgage," said Patti Jo Fitzpatrick, President of Minnesota Realtors. "That has affected the buyers."

That $2,200 a month for a mortgage doesn’t include things like taxes and insurance. 

According to Minnesota Realtors, the median-priced home is $2,800 a month compared to $1,800 in 2021

How buyers feel

Dig deeper:

Despite the numbers, some current homeowners are looking to buy a new home.

"It's the right time for us. We're going to be happier in the new home, and because it is, it's just the right time in terms of the rest of our finances. It will be better off financially and on a more stable financial footing if we sell now and take care of some other debts that we have," said Amber Ronning, a potential home buyer.

Ronning told us she purchased her first home 12 years ago. 

But now the median home price is three times more than what she purchased her home.

As for Fitzpatrick, she tells us most of her sellers are looking to rent before buying a new home.