According to new data from Minneapolis Area Realtors and St. Paul Area Association of Realtors, since last summer, housing prices have dropped 3.1% to a median sales price of $396,100. This is the largest annual decrease since December 2011.

In the Twin Cities area, prices decreased significantly during April and May. However, in June, they rose .5% to a median price of $382,000.

This change may indicate future stability in housing prices in the Twin Cities area. However, while prices are leveling-out, supply is still not meeting demand.

“Some remain convinced of an impending crash, but we’re still not seeing it,” said Brianne Lawrence, President of the Saint Paul Area Association of REALTORS®. “Two months of prices softening around 1.0 percent before climbing again is more like a blip or pause than a downturn.”

This June, 16.5% fewer homes were listed than last year. Interest rates are still hovering around 7% on an average 30-year mortgage. Many existing mortgages are locked in at rates well below this level, leaving sellers reluctant to list. In the Twin Cities metro area, sales decreased 18%.

This decision not to sell leaves a huge gap between supply and demand. This is leading to increased competition within the existing market.

Sellers in June received offers between 101-102% over asking price, simply because demand for these homes is so high.

“Even with fewer sales in light of higher rates, homes are still selling relatively quickly while sellers get relatively strong offers,” says Jerry Moscowitz, President of Minneapolis Area REALTORS®. “That’s partly driven by homeowners with rates under 4.0 percent staying put.”