Twin Cities area home price reductions more common, but it’s still a seller’s market

Price reductions are becoming more common on homes for sale in the metro area, a sign that higher interest rates are cooling one of the hottest parts of the Twin Cities economy.

In June, about 14% of active sellers cut the price of their house at least once, according to Zillow.com. That’s still below the national average, but it’s up from 10% in May and 7.6% in April.

Since the mid-2010s, Twin Cities residential real estate has been a seller’s market, and it’s become more imbalanced in favor of sellers during the pandemic.

But with the jump in mortgage rates that started early this year, buyers, sellers and agents have been watching for the market to start swinging back in buyers’ favor. Data for May and June sales activity suggest it has — but only a little.

“Sure, things are rebalancing in a way that hopefully eases the landscape for buyers, but we are still quite far from becoming a buyer’s market,” said David Arbit, director of research for the Minneapolis Area Realtors.

While more sellers are offering discounts, few are slashing prices. The median price reduction in the metro in June was just 3%. Meanwhile, buyers are also coping with the diminished spending power that higher mortgage rates have wrought. And the number of homes for sale remains near historic lows.

“For what we wanted, I felt like there were slim pickings,” said Jenna Gerlach of Denver, who has been watching the market closely. She and her husband Mike want to move to the Twin Cities this…