Learn more about the housing market in Minnesota

Every state is unique when it comes to the real estate market. That’s why it’s critical to understand the market you live or operate in. Whether you’re renting, buying, or selling, it will impact many aspects of your life.   

Key Takeaways

1. Minnesota’s housing market remains competitive, with prices still rising in most regions due to long-standing inventory shortages and steady buyer demand.
2. Mortgage rates have eased into the 6% range, improving affordability slightly and bringing more buyers back into the market heading into 2026.
3. New construction increased in 2025, especially multifamily builds, but supply is still far below what’s needed to balance demand statewide.
4. Affordability pressures persist, with many Minnesota households cost-burdened and rents continuing to outpace income growth.

Minnesota Housing Market Overview 

Bordering Lake Superior and situated at the northern mouth of the Mississippi River, Minnesota is known as “Land of 10,000 Lakes” for the abundance of freshwater lakes and rivers within its borders.  Minnesota thrives on a number of industries, and according to data from IBISWorld, Real Estate, Rental and Leasing is the sector that contributes the second most to its 2026 GDP behind manufacturing. An overview of the housing market in the state, therefore, is very worthwhile. 

As we move to the end of 2025, many of last year’s forecasts have played out as expected. Experts anticipated modestly rising home prices, steadying mortgage rates, and a gradual return of buyers who had previously paused their searches. So far, these predictions have largely held true. Minnesota Realtors leadership continues to highlight the state’s persistent low-inventory problem, which has kept competition high and pushed prices upward in many regions.

Mortgage rates—a major driver of buyer behavior—have also begun to settle. After national 30-year fixed mortgage rates approached 8% in late 2023, they gradually eased through 2024 and continued stabilizing throughout 2025, hovering in the 6% range. Minnesota mirrors this national shift, as inflation cools and lending conditions slowly soften, expanding opportunities for would-be homeowners who sat on the sidelines during the peak of rate volatility.

Looking ahead to 2026, economists expect incremental improvements in affordability, though the state’s supply constraints will remain a defining challenge. Local reporting in late 2025 described Minnesota’s market as continuing to see “record-high prices, steady demand, and persistent headwinds for buyers,” highlighting how tight inventory is still shaping buyer experiences. If construction activity increases and mortgage rates continue their downward trend, Minnesota may see a healthier balance between supply and demand—though competition for desirable properties is likely to persist.

Minnesota Market Trends  

To understand the Minnesota real estate market, it’s important to keep up with trends. Let’s look at some key ones in Minnesota.

Note: These statistics are based on Redfin’s monthly housing data from October 2025. 

Median Home Price 

The median sale price of a home in Minnesota as of October 2025 was $360,800 according to Redfin’s monthly housing market data. This is an increase of 2.8% from October 2024, accurately reflecting predictions of continually increasing house prices in the state. In Minneapolis, the most populous city in the state, the median price is slightly lower at $350,000, but also experienced an increase of 2.9% from 2024. However, appreciation is not consistent in every major city in Minnesota. In Saint Paul, the state capital, prices have only increased 0.6% to $290,000. 

The median sales price varies significantly across different regions within Minnesota, highlighting the diversity in home prices. It is important to remember that statewide trends are aggregates from a diverse array of housing markets within the state. 

Number of Homes Sold in October 2025 

6,123 homes were sold in Minnesota in October 2025, which is a 3.5% increase from the previous year. This number can be expected to increase as the Spring and Summer months approach, when home sales are much more common. Though this is a significant increase from the previous year, it falls short of peaks that were seen in the summers of 2021 and 2022. 

Home buyers are facing challenges due to low inventory and intense competition, often paying well above the list price to secure a property. Higher interest rates are also contributing to the low inventory, as owners with lower rates are hesitant to sell. 

Again, it is important to keep in mind that nationally speaking, sales usually peak during the Spring and Summer months and slow in the winter. In fact, the National Association of Realtors (NAR) predicts that in February and March alone, sales activity increases by as much as 34% and prices by 3%. 

Median Days on Market (DOM)  

Days on market (DOM) is a measure of the average length of time a home remains listed on the market before being put under contract. A lower DOM signals a highly competitive seller’s market with more pressure on buyers to make higher offers and remove contingencies. In such markets, homes often sell above the list price due to the competition. A higher DOM signals a buyer’s market as sales are slower and sellers have less leverage. 

The median DOM in Minnesota in October 2025 was 35 days, which is an increase of 2 days compared to October 2024. This means that on average, listings spend a little over a month on the market before they are purchased. This increase from the past year potentially points to a market that is increasingly favoring buyers over sellers. 

New Supply and Pending Sales Statistics

Residential construction activity has grown in 2025. After slower permitting in 2023 and 2024, the Twin Cities region saw a rise in new housing permits throughout 2025, driven largely by increased multifamily development. According to data from Housing First Minnesota’s 2025 monthly permit reports, builders pulled significantly more permits year-over-year, signaling ongoing efforts to address the state’s persistent inventory shortages. However, industry analysts still caution that new construction remains below the level needed to meaningfully close the supply gap.

Property Tax Rate 

According to Rocket Mortgage, the average property tax rate in Minnesota is 1.1%. This is a higher average than 32 other states in the country, and its average annual property tax is around $2,484.78. However, it is important to keep in mind that this statistic reflects the average of a lot of data in a populous state with significant geographic and economic diversity. Tax rates are likely to vary depending on the value of a home and its location in the state.  

Foreclosure Rate in Q1 of 2025 

According to ATTOM’s Q1 2025 Foreclosure Market Report, Minnesota recorded 1,061 foreclosure filings in the first quarter of 2025. While the state’s exact per-household ratio isn’t stated in national rankings, the data shows Minnesota continues to perform better than the national average, which was 1 filing per 1,515 housing units. Minnesota also had one of the fastest foreclosure timelines in the country at about 139 days.

Hottest Local Markets in Minnesota   

1. Minneapolis  

By a significant margin, Minneapolis is the most populous city in Minnesota. Situated in the eastern part of the state near the state’s border to Wisconsin, Redfin identifies Minneapolis as a highly competitive market. As previously mentioned in this article, median prices have increased 2.9% from 2023 to $350,000. Its DOM of 23 is also lower than the statewide average, suggesting a competitive seller’s market. Some of the most popular neighborhoods in Minneapolis are Linden Hills, Fulton, and Downtown West.  

2. Saint Paul 

Behind Minneapolis, the capitol city Saint Paul is the second most populated city in Minnesota. Though it is directly to the east of Minneapolis, the details of its housing market are a little different. Its median home price is lower at $290,000, and its DOM of 32 suggests signs of a slowing market in the colder months. Some of the most popular neighborhoods in Saint Paul are Highland, Payne – Phalen, and Downtown St. Paul.   

3. Bloomington 

Located directly south of Minneapolis and southwest of Saint Paul, Bloomington is significantly less populous than either city. However, its housing market is still considerably competitive. Its DOM of 22 is lower than either city, and its median home prices in October 2025 are also higher at $379,000, an increase of 2.4% from 2024. Some of the most popular neighborhoods in Bloomington are South Loop and Normandale Highlands.   

Factors Impacting the Minnesota Housing Market  

A holistic view of Minnesota’s housing market requires a basic understanding of the main economic drivers affecting the market. Buyers are willing to pay significantly above the asking price to secure a home due to high demand and low inventory. Let’s take a look at a few critical ones below: 

Minnesota's robust economy and affordable cost of living continue to attract buyers to the housing market. The state’s strong job market and friendly tax policies also play a significant role in maintaining a stable housing market. 

However, the imbalance between buyer demand and available homes remains a defining challenge in 2025. Inventory levels are still historically low, and new construction has not kept pace with household formation. This shortage continues to push prices upward and intensify competition, especially in the Twin Cities metro.

Mortgage rates in 2025 have begun easing from their 2023–2024 highs, but affordability remains strained. While falling rates have encouraged more buyers to re-enter the market, they have also increased demand at a time when supply is still tight. Economists expect conditions to slowly improve into 2026 as rates stabilize and construction activity gradually rises.

Mortgage Rates 

Mortgage rates are a common cause of concern for would-be homeowners across the U.S. in 2025 and 2026. As previously mentioned, national averages have dipped from last fall’s record highs, and Minnesota is no different. According to Zillow, the housing market Minnesota is currently facing sees 30-year fixed mortgage rates down to an average of 6.125%. This accurately reflects the prediction that interest rates would decrease but stabilize above 6%.   

Inflation and Cost of Living 

Mortgage rates are tied to inflation, another massive contributing factor to the affordability of housing and the state of housing markets in general. Inflation has increased the cost of living for many across the U.S., including in Minnesota. Minnesota Compass reports that over 25% of Minnesota households are “housing cost-burdened,” meaning they spend 30% or more of their income on housing costs. This is a sign that inflation and rising costs are squeezing many families. This means fewer people can truly afford to limit housing costs to less than 30% of their monthly income.   

Population Changes and Demographics 

A changing population can also have implications for the housing market. According to the U.S. Bureau of Labor Statistics, the unemployment rate in Minnesota is one of the lowest in the country. Its unemployment rate of 3.6% makes it the 15th lowest rate in the country. This low unemployment rate suggests a thriving and healthy economy that is bound to help the housing market in the state.   

Minnesota Housing Market Forecast 2026  

Minnesota’s housing market continued its upward trajectory through 2025, with median prices reaching new highs and competition remaining intense due to limited inventory. As we move into 2026, analysts expect home prices to keep rising, but at a slower, more sustainable pace. Mortgage rates have gradually eased from their 2023–2024 peaks, improving buyer activity, while modest increases in new listings suggest the market may finally be gaining some supply relief. Still, ongoing inventory shortages and persistent demand mean Minnesota is likely to remain a seller-leaning market in 2026, even as price growth cools compared to the rapid appreciation of previous years.

Likelihood of Minnesota Housing Market Crash  

Though the way prices in the Minnesota housing market have continued to surge may seem concerning, experts have asserted that a crash is significantly unlikely. There are many reasons for this, including a very healthy economy signified by a low unemployment rate, interest rates that have significantly settled from last year, and a growing number of people who are moving to the state. Minnesota's strong job market and friendly tax policies continue to attract buyers, making a housing market crash unlikely. The market seems poised to continue appreciating, but it is unlikely to reach any significant or concerning threshold in the near future. 

Forecast for the U.S. Housing Market  

Now that we’ve looked at Minnesota’s housing market, let’s zoom out a little bit. What about the U.S. housing market? What do you need to keep an eye on in the coming years?   

The United States' current median existing-home sale price is around $415,200 per the National Association of Realtors. The inventory, though, remains low. A balanced market typically has a 5-to-6-month supply, but the current figure is 3 months, keeping conditions constrained.

We’re currently in a seller’s market with buyers looking at continued rising house prices—although they are rising at a slower pace compared to previous years.. The same trend can be seen with renters. Housing continues to appreciate, in general.

Dr. Lawrence Yun, Chief Economist and Senior Vice President of Research, National Association of Realtors, believes the housing market will appreciate 15 to 25% over the next five years. He thinks that the seller’s market will continue because housing inventory will remain low. In 2026, he predicts that existing home sales will rise an additional 13%. Yun expects mortgage rates to stabilize at the lower end of the current 6-7% range through 2025 and 2026 as the Federal Reserve continues gradual rate cuts. There's an anticipation of a more balanced market in the coming years, with moderate price growth and a greater amount of Americans re-entering the market.

Hybrid work also impacts the housing market. This shift in work culture means suburbia will continue to grow. States like Texas, the Carolinas, Tennessee, and Florida should see continual growth.

The number of single-family homes built decreased over the past couple years while the number of multi-family homes increased due to lower prices and a demand for affordable housing. Year-to-date single-family housing starts were down about 7.1% in 2025, whereas starts for buildings with five or more units were up roughly 14.5% Higher mortgage rates and inflation (affecting price of materials) were the main causes.

Lower income households continue to struggle in the current housing market. This trend appears likely to continue into the foreseeable future. According to the National Association of Home Builders, approximately 74.9% of U.S. households were unable to afford a newly built median-priced home in 2025. Without enhanced supply or helpful subsidies, the outlook is that many Americans will still wrestle with housing affordability in the years to come.

Minnesota Rental Market  

The rental and buying market are obviously closely linked. When home prices fall, landlords are more likely to buy properties to rent out. Home prices and rental prices are correlated as well because a hot market means prices rise.   

Rents were more unaffordable than ever in 2021 and 2022. In 2022, 22.4 million households paying rent said it was unaffordable, which is the highest that figure has ever been, according to a January report from the Joint Center for Housing Studies at Harvard University. The study found that half of all renters in the United States spent over 30% of their income on rent and utilities.   

In Minnesota, rental costs remain elevated: the statewide average rent across all bedroom counts and property types is about $1,600 per month as of December 2025.

The markets cooled in 2023, though, due to new units and decelerating demand. But a serious problem persists: Rent increases are still outpacing income gains.    

Moreover, high interest rates are keeping borrowing and transaction activity down. Over half the banks surveyed by the Federal Reserve reported that demand for multifamily loans decreased year-over-year.   

The pandemic caused a housing disparity that isn’t going away anytime soon. Unaffordable housing is a serious issue across America. Whether high rents or low income is the main cause doesn’t change the fact that this problem is widespread.  

This short summary leads directly into Minnesota’s current rental market. Below are just a few of the current trends for Minnesota’s rental market based on data pulled from Zillow:  

Minnesota Rental Market Key Trends  

• Median rent: $1,600

• Month-over-month rent charge: $0

• Year-over-year rent charge: +$40  

• Available rentals: 7,178

Conclusion  

Minnesota is a large and diverse state, but as 2026 begins, several trends point to a gradually stabilizing housing market. Price growth has cooled, inventory has improved slightly in some regions, and easing mortgage rates are helping more buyers re-enter the market. Still, Minnesota’s long-standing supply shortages and affordability challenges remain. Analysts will continue watching both local conditions and national factors like interest rates, inflation, and new construction to see how the market adjusts throughout 2026.

FAQs

Is Minnesota’s housing market expected to cool down in 2026?

Yes. Experts expect price growth to slow to more sustainable levels as mortgage rates stabilize and new listings slowly rise. However, demand is still strong, so a buyer’s market is unlikely.

Will home prices continue going up in Minnesota?

Most forecasts suggest moderate price appreciation in 2026. Prices are not expected to fall due to ongoing supply shortages, especially in the Twin Cities metro.

Are mortgage rates dropping in Minnesota?

Rates have eased from their 2023 highs and are now averaging around 6.1% for a 30-year fixed mortgage statewide. Projections show gradual stabilization through 2026, not dramatic declines.

Is Minnesota at risk of a housing market crash?

A crash is considered highly unlikely. Minnesota’s strong job market, low unemployment, stable population growth, and limited inventory all support continued market stability.

Should buyers wait to purchase in Minnesota?

Most experts advise that waiting may not significantly improve conditions. Prices are expected to keep rising gradually and competition will likely remain steady in 2026.