Total new-home closings: 4,076
The good: Market predictions call for a very modest (1%) increase in new-home closings.
The bad: The market has gone relatively flat in early 2015, despite economic growth.
The bottom line: If builders are going to get the most out of the Twin Cities, they’ll need to find a way to reach buyers in the $250,000 range.
Market numbers among new single-family homes in Minneapolis are at their lowest in three years as of the first quarter of 2015—despite economic growth across the Twin Cities—because of an unfortunate collision between price increases and decreased demand. The average sale price among new homes increased from $202,791 to $251,599 over a two-year period ending January 2015, while the majority of closings activity centered at $150,000 to $200,000. A decline among REOs and foreclosure-related activities has improved market conditions over the past two years, but the benefits evade home builders, as those shares of the market have increased sales among existing properties only, increasing them by nearly 20%. (Not a surprising fact, considering that the gap between new and existing home prices in some areas ranges from $125,000 to $225,000.) A decline of 9% in the first quarter of 2015 among new-home starts shows that builders may be conceding somewhat to the competition; but with a 13% increase in year-to-date permits year over year in March 2015, they’re showing no signs of exiting.