Buyers and sellers pull back in face of higher rates and uncertainty

(March 17, 2025) – According to new data from the Minnesota state and Twin Cities metro REALTOR^® Associations, both seller and buyer activity cooled in February while prices rose.

• New listings fell 5.3% in the Twin Cities
• Signed purchase agreements declined 7.7% in the metro
• The median sales price increased 6.9% in the metro

Sellers, Buyers and Housing Supply

After five straight months of year-over-year gains, sellers both statewide and in the metro listed fewer homes on the market. New listings were down 7.2% and 5.3% respectively. That includes builders and existing homeowners as well as all property types and price ranges. And pending sales for both the state (-7.9%) and metro (-7.7%) fell for a second month after several consecutive months of gains late last year. While January and February temperatures were a bit lower than average, mortgage rates remained higher than expected. Higher rates, combined with our long-running inventory shortage, continued to squeeze affordability. First-time buyers face additional hurdles because they can’t leverage the equity from a previous home. Other recent factors—including economic uncertainty, declining consumer confidence, tariffs and changes to the federal workforce—may have already played a role or could soon become influences. And many sellers are choosing to stay put with their low interest rates. But rates are softening lately, as investors flock to safety in treasuries, which drives the price up and the yield down. The 30-year fixed rate mortgage follows the 10-year yield.

There was little change in the number of homes for sale. The number of active listings is flattening out after months of gains. It’s premature to determine if that signifies a trend shift. Statewide inventory levels were up about 1.0% while metro levels declined about 1.0%. Inventory levels had been growing partly because seller activity has risen more than buyer activity. “We actually had more homes for sale last month than any February since 2020,” said Patti Jo Fitzpatrick, President of Minnesota Realtors^®. “As rates come down competition should heat up, creating new opportunities for buyers. Working with a local Realtor® will put buyers in the best position to make their best offer on a home this spring.”

Additional housing supply would mean a more balanced market, less upward price pressure and enough options for all kinds of buyers and situations. We need a 150.0% increase in the number of homes for sale to achieve a balanced, neutral market. That amounts to over 16,000 additional properties across the state.

Prices, Market Times and Negotiations

The statewide median home price was up 4.9% to $343,000, while the metro median price was up 6.1% to $380,000. But today’s home buyers are more sensitive to their mortgage payment than to home prices in general. Even as home prices rise, monthly payments could fall if rates decline enough. A typical “all-in” payment on the median priced home, including taxes and insurance, was about $2,500 statewide and $2,800 in the metro for 2024. In 2021, $1,800 per month was the typical metro mortgage payment. “Prices, incomes and rates all matter. That hasn’t changed,” said Jennifer Livingston, President of the Saint Paul Area Association of REALTORS^®. “But additional housing supply could be the biggest lever we have to move the needle.”

On average, sellers accepted offers at 96.7% of their list price statewide and 97.7% in the metro. That marks a fourth consecutive month of metro gains. Those offers were accepted after an average of 59 days on market statewide and 69 days in the metro—both up from a year ago. Statewide, half of newly built homes fetched over 99.8% of list price and half the homes also sold in under 54 days. But half of existing homes fetched over 97.9% while half sold in under 49 days. Condos took the longest to sell and yielded the weakest offers. “Rates and affordability are still driving the bus,” said Frank D’Angelo, President of Minneapolis Area REALTORS^®. “That said, some buyers are finding success in different segments or locations than they’d ordinarily consider.”

Locational Differences | Twin Cities Metro

For cities with at least five sales, Oak Grove, Victoria and Champlin had the largest sales gains. The highest priced areas were Orono, Wayzata and Medina while the most affordable areas were Columbia Heights, Little Canada and St. Anthony. But the largest increases in prices were in Wayzata, Mendota Heights and Orono. The most balanced markets were Wayzata, Hanover and Delano while the most undersupplied markets were Champlin, Circle Pines and New Brighton. Homes took the longest to sell in Oak Grove, Lake Elmo and Mendota Heights and sold the fastest in North St. Paul, Carver and Columbia Heights.