Rising mortgage rates have made houses more expensive, but there’s a silver lining for buyers: More choices and a little less competition.

During May, there was a 3.2% increase in newly listed houses, according to a monthly report from the Minneapolis Area Realtors released Wednesday.

That gain, coupled with a double-digit decline in pending sales, left buyers with 6,766 house listings at the end of the month, 5.3 % more than last year and the first annual inventory gain in more than two years.

“We’ve gone from an average of 50 offers to an average of five to 10 offers,” said Brenda Tushaus, chief executive of Re/Max Results. “The buyer demand is still there, but it’s more manageable.” Though higher mortgage rates are tempering demand, there are still more buyers than sellers in some areas and there’s still plenty of competition.

On average, houses sold in just 23 days during May, 4.2% faster than last year. With buyers still making strong offers, sellers got more than 100% of their asking price, and that’s caused the median price of all sales during the month to increase 9% to a record $375,000.

One sign that the market is becoming a little less tight, Tushaus said, is that open houses are returning. She said the company’s internal open house tracking system has been “blowing up.”

“At this time last year the houses were selling too fast to hold opens,” Tushaus said.

“This doesn’t mean that inventory has made a comeback.

Rather, houses are now lasting on the market for more than a few hours.”

Despite the decline in sales, it’s still a seller’s market. At the current sales pace, there were only enough houses for sale at the end of the month to last 1.3 months. The market is considered balanced where there’s a four- to six-month supply of listings.

Statewide, the situation was similar with fewer sales and more new listings compared with a year ago, according to a separate report from the Minnesota Realtors.

The group said that there were 10,408 homes for sale at the end of May, 4.8% more than last year. At the same time, closings were down 6.5%.

Despite that decline, demand was intense. The median price of all closings increased 10.2% to $341,500 while the average days on the market decreased 10.3% to 26 days. On average, sellers received 103.2% of their asking price.

Among the state’s 12 economic development regions tracked by the group, sales increased the most in the East Central region and in the Northwest, where lake home sales remained brisk.

Sales declined the most in the Southwest and West Central regions.

Despite declines in sales, the lingering imbalance between buyers and sellers means many buyers are still offering more than the asking price and waiving inspection contingencies, said Genna Porter, owner/broker at Picket Fence Realty in Minneapolis.

Still, there’s no doubt that it’s a less-competitive market, she said. She recently wrote offers on two homes and in both cases her buyer was competing against only one other.

“You’re still seeing buyers out there and they’re making quality offers,” she said. “But I’m showing just one house at a time.”

With the market shifting and economic uncertainties looming, she has had some clients delay their home purchase while others anxiously try to time their next move. Rising mortgage rates are the biggest concern at the moment.

At the end of May, the 30-year fixed-rate mortgage averaged 5.09% with an average 0.8, according to a weekly survey by Freddie Mac. At the end of last week, the 30-year rate had increased to 5.23%.

Policymakers at the Federal Reserve on Wednesday lifted the nation’s benchmark interest rate again, a move that will ripple through mortgage and other rates, to help quell inflation.

The rate hikes are causing a lot of angst in the residential real estate market, especially for people like Tim and Stephanie Oehler, who are trying to both buy and sell.

The Oehlers are building a house in Edina that’s supposed to be complete in September and are also trying to time the sale of the house they already own, also in Edina.

Porter, their agent, said she doesn’t want to list their house too quickly, fearing it will sell and force them to move before their new one is ready, but also doesn’t want to miss the strong summer market.

“At times it feels overwhelming to design and build a new house, especially while we try to sell our current home,” said Stephanie Oehler.

“We’re really excited to finish up the project and to start living in our new home.”

Tim Oehler said they are selling the house they bought shortly after getting married because they now have two kids and he has started working from home full-time. They need more space.

“With rising rates, there’s definitely some extra pressure to get our house on the market as quickly as possible,” he said.

“Building a home allowed us to get the home we want in a neighborhood that we love.”

Jim Buchta • 612-673-7376