Declining Real Estate Inventory a Sign of Market Improvement?

Is demand in the local housing market starting to catch up to supply?

The answer is yes, according to the Minneapolis Area Association of Realtors.

The association's local market update, provided by on a monthly basis, shows a roughly 5 percent increase through September this year in the number of closed sales in Inver Grove Heights compared to the same period last year.

At the same time, the months supply of inventory declined by 3 percent this September, compared to the same month last year. The number of new home listings coming on the market also dropped 5 percent year-to-date.

The inventory of available homes is an indication of supply and demand and thus, market prices. A shrinking inventory could mean that demand for homes in Inver Grove Heights is starting to catch up to the supply of available homes.

The decline in inventory locally parallels a similar trend taking place across the Twin Cities region, according to a press release issued by the association. Inventory levels dropped 20.7 percent to 22,476 active listings across the seven-county metro area. That marks the largest inventory decline in more than seven years, the association said.

Even with a smaller inventory and a rising number of sales, don’t expect a complete turnaround in the market anytime soon. The average sales price for homes in Inver Grove Heights is down roughly 7 percent through September this year, compared to the first nine months of last year. The average time a home sits on the market before it is sold is also holding steady at 133 days.

Across the Twin Cities, traditional sale prices fell 12.0 percent to $188,000, while foreclosure prices dropped 8.2 percent to $102,825 and short sale prices were down 7.5 percent to $129,500.

"What we're seeing is beyond the usual seasonal improvement," said Minnneapolis Area Association of Reatlors President-Elect Cari Linn. "Small steps, for sure, but taken without outside incentives. That's progress in my book."

To view housing market data for Inver Grove Heights and the Twin Cities area, click on the PDF files attached to this article.