If you have been waiting for the Minnesota housing market to “thaw,” the release of the 2025 Minnesota Annual Housing Market Report offers some good news—and some new challenges.
The headline for 2025 is a mix of relief and reality: While we have seen a rise in inventory as sellers finally return to the market, home prices have hit another all-time high. Whether you are looking to buy your first home or sell and move up, here is a breakdown of what the latest data reveals about our local market.
1. The “Lock-In” Effect is Fading
For the past few years, many homeowners felt “locked in” by their low mortgage rates, unwilling to sell and take on a higher rate on a new home. In 2025, that trend began to break.
New listings rose 4.6% to a three-year high. Why the shift?
- Life Happens: Many sellers simply couldn’t wait any longer due to job changes, growing families, or aging parents.
- Confidence: Sellers are becoming more confident in the marketplace and accepting of the current rate environment.
What this means for you: If you are a buyer, you finally have more options. While inventory technically dipped at year-end, there were more active listings throughout 2025 than in the previous year.
2. Home Prices Hit a Record High (Again)
Despite higher interest rates, home prices in Minnesota have not dropped. In fact, they have reached a record high for the 14th consecutive year.
- Statewide Median Price: Rose 2.9% to $355,000.
- Twin Cities Metro Median Price: Rose 2.6% to $390,000.
The typical monthly payment on a median-priced home is now approximately $2,600 statewide due to the combination of prices, rates, taxes, and insurance.
3. A Tale of Two Markets: Luxury vs. Entry-Level
The most shocking statistic from the 2025 report is the divide between affordable housing and the luxury market. High interest rates have disproportionately hurt first-time buyers, while luxury buyers (who are often less reliant on financing) are surging ahead.
- Luxury Boom: In the Twin Cities, sales of homes over $1 million rose by over 22%.
- Entry-Level Struggle: Sales of homes under $300,000 dropped by 6%.
First-time buyers made up just 21% of the market nationwide—the lowest figure in at least 45 years. Meanwhile, move-up buyers with equity from their previous homes had a distinct advantage.
4. Expect a Slower Pace
The days of the 2021 “frenzy” where homes sold in hours are largely behind us.
- Days on Market: Homes are now spending an average of 44 days on the market, the longest duration since 2020.
- Buyer Power: Buyers are becoming more selective and thoughtful. As inventory pressure eased slightly, they became more willing to compromise but less willing to rush.
5. Regional Hotspots
Real estate is hyper-local. While the Twin Cities remains the highest-priced region, other areas are seeing different trends.
- Fastest Selling: Duluth/North Shore, St. Cloud, and Rochester.
- Most Affordable: Hibbing/Virginia, Willmar, and Bemidji.
The Bottom Line
The 2025 market is complex. We are seeing more inventory and activity (closed sales were up 2.4%), but affordability remains a major hurdle.
- If you are selling: Patience is key. Well-priced, turnkey homes can still see multiple offers, but the market is no longer instantaneous.
- If you are buying: You have more choices than you did a year ago, but you are facing stiff competition from cash buyers and those with significant equity.
Are you wondering how your specific neighborhood or price point is performing? Headlines give us the state averages, but your experience will depend on your local community. Contact me today for a custom market analysis of your home.