As anyone in the market for a new house in the past year probably knows, 2023 was a challenging year for the real estate market.

A new report from Minneapolis Area Realtors and St. Paul Area Association of Realtors says home sales in the Twin Cities last year fell to their lowest level since 2011. That came just two years after sales reached a 20-year high in the area.

The realtor associations blamed high interest rates, rising prices and the tight housing supply as the main reasons for the drop in house sales. The report noted that mortgage rates rose from 2.7% to 8% between 2021 and 2023, yet the region still saw record sales prices, just at a much slower pace.

While sales dropped, officials say the past year did represent more of a return to the “normal,” pre-COVID market.

“During the year, we saw many similar trends from the second half of 2022 where higher rates began to weigh heavier on the marketplace,” said Amy Peterson, president of the St. Paul Area Association of Realtors. “We saw fewer listings and fewer sales; and yet higher prices, surprisingly strong offers and relatively quick market times.”

In 2023, the average home took 40 days to sell compared to 31 days in 2022, the report states. And with most people focused on monthly payments, the rate hikes have certainly played a large role in slowing sales, as the typical monthly payment on a median-priced home jumped from around $1,600 to $2,700 since 2020.

The realtors say that if rates start coming down, the market could see another large swing the other way.

“If rates do come down, a lot of pent-up demand that’s been sidelined recently will be unleashed which could lead to another frenzied market with listings selling for over asking price,” Minneapolis Area Realtors President Jamar Hardy said. “Whatever happens, it’s critical to work with a qualified market expert to navigate these complexities.”