Higher mortgage rates and overall affordability woes are leading to drop off in activity in the Twin Cities housing market on both the buyer and seller ends of the spectrum. Consequently, the median home price in the metro area saw a minute 0.6 percent growth to $342,000 in February.

Moreover, the overall housing market is showing signs of softening from the all-out frenzy seen over the last few years. Higher rates are both placing more pressure on what a buyer can afford to purchase and also disincentivizing sellers from listing their homes.

“People should understand that their home hasn’t necessarily lost value simply because the median price falls,” according to Jerry Moscowitz, President of Minneapolis Area REALTORS®. “The median reflects the mid-point where half the homes sell for more and half for less. If there are more luxury properties, new homes or condos selling, that all impacts prices. So does supply and demand.”

According to a new report from Minneapolis Area REALTORS® and the Saint Paul Area Association of REALTORS®, sellers in February brought 24.3 percent fewer homes to the market from the same time last year. Likewise, buyers signed 23.6 percent less purchase agreements since last year.

“We’re in a place where buyers have more leverage but lowball offers likely won’t be successful,” said Brianne Lawrence, President of the Saint Paul Area Association of REALTORS®. “That means buyers are writing offers at or slightly below list price and they can take more time to decide on what works best for them.”

Additionally, in the month of February, the metro’s supply of home inventory rose 44.4 percent to 1.3 months (a healthy market is considered to have 4-6 months of inventory). The average time a home was listed increased to 62 days, a 40.9 percent change.