As we approach the end of the year in Minnesota, the rhythm of life shifts. The days get shorter, the temps get colder, and people settle into the cozy rituals that make winter here feel special. And right on schedule, the real estate market slows down, too.
But slowing down doesn’t mean declining. In fact, the Minneapolis–St. Paul market remains one of the strongest and most stable in the country, especially when you focus on the 7-county metro, which is where most buyers want to be.
Here’s what’s happening right now — and what it means for buyers and sellers heading into 2026.
For previously owned single-family homes, the year-over-year appreciation rate is 4.5%. This is exactly where we want to be — growing, but not overheated.
Some markets around the country are seeing price declines. We are not.
Home prices here continue to hold their value, even when individual listings make price adjustments.
A Spotty, Discerning Market
The 2025 market is unusual — but honestly, when hasn’t it been?
Here’s the pattern we’re seeing:
Homes at or below the median price point often sell quickly and may receive multiple offers.
Higher-priced homes have a smaller buyer pool and may sit longer.
Across all price points, buyers are becoming more selective. They want move-in ready. They want value. They want fewer reasons to hesitate.
For sellers, this means preparation matters more than ever. Removing objections before buyers walk in the door is critical.
Current Prices and Inventory Levels
Previously Owned Single-Family Homes (7-County Metro)
Median price: $418,000
Average price: ~$508,000
Months supply:1.7 This number has not budged in more than a year.
Anything under 5 months of supply is considered a seller’s market, and we are firmly in that territory.
New Construction
Median price: $600,000
Average price: ~$713,000
YOY appreciation: 6%
Months supply: ~6 months
New construction is a balanced market, offering buyers an abundance of choice—but typically with trade-offs, including larger homes on smaller lots and landscaping that won’t feel mature for years.
Why Winter Is One of the Best Times to Buy
If you’re planning to buy at all, winter often provides the strongest buyer advantages:
More motivated sellers
Less competition
More negotiation power
More time to make decisions
Less pressure to waive protections
You can often secure a lower price in November or December than you can in the spring, when additional buyers flood the market.
Looking Ahead: Predictions for 2026
The Chief Economist for the National Association of Realtors predicts a 16% increase in home sales next year, assuming the Federal Reserve reduces interest rates as the economy cools.
If interest rates drop to around 6% or below, demand could skyrocket.
That sounds great for affordability — but keep in mind that lower rates also mean more competition. Prices and bidding activity typically rise when buyer demand returns in force.
And remember: Minnesota’s spring market starts in January.
Every year, without fail.
If you’re hoping to avoid competition, winter may be your moment.
Final Thoughts
Whether you’re buying or selling, strategy is everything.
Buyers: Winter gives you leverage and options.
Sellers: Patience is key in slower segments, but demand always returns with the new year.
The Twin Cities continues to offer stable appreciation, strong demand, and a market that behaves differently from many coastal or high-volatility areas.
And if you’re relocating here — welcome. It’s a great place to be, even in the winter.
If you want personalized advice or want to start a conversation about buying or selling in 2026, I’m here to help!
Hi and happy new year! Who wants to start the year off with some DATA and a look at what the real estate market is doing PLUS what I believe will happen with the housing market in 2022? I actually LOVE data – it tells a very clear story, so let’s dive in and take a look at what that data is telling us.
Prefer to watch rather than read this? 😉
I wish I had a crystal ball to tell you what is going to happen to the real estate market in 2022, I don’t, but I will make some educated guesses! In addition to that I’m going to share with you what the offers that have been accepted have looked like in the past month.
I like that info because it is ALSO a gauge for how strong the market is – what are sellers wanting to see and what are buyers willing to do to win?
Sisyphus at work
in 2021, being a buyer (or a buyer’s agent!) could feel like pushing a boulder up hill. It was hard, tiring, a little stressful but it was ultimately satisfying if everyone hung in there (I’m stubborn – I don’t quit).
It’s me. I’m stubborn like a mule.
The market was really rough for buyers because demand for homes here is HIGH and supply is LOW. I think many of us went into this winter hoping for a bit of a break on the horizon, but the numbers are not making it look like that will be the case.
Inventory of homes was really low LAST January first – historically low! and as of the first week of january this year we have 15% fewer listings on the market to choose from than we did then. We are still in a ridiculously strong seller’s market.
Fun fact – the last time the market was considered “balanced” in the twin cities was 10 years ago. It has favored sellers ever since and doesn’t seem to be lightening up at all.
As a colleague said today, there is a lot of national press saying that the market is loosening up but the numbers tell a different story.
Do tell, National News!
It’s important to look at DATA for the market you’re in and understand what that means for your situation. So let’s look at the data for the twin cities – you know that price is a function of supply and demand, and we have already established that supply is low. It has been consistently low for years and the recent challenges with supply chain and lumber prices are not helping supply to correct that quickly. It’s going to be a long term process.
Absorption Rate
Realtors look at how many months supply we have of homes available to sell if NO OTHER HOMES ARE LISTED in order to determine what kind of market we are in – 5-6 months is considered a balanced market, fewer months worth of inventory favor sellers and the smaller the number of months the more strongly it favors them, and vice versa for buyers.
Currently, the total months supply we have now including ALL property types is 8/10 of one month. .8 months is WAAAAAY less than 5-6 months.
If you break this down further you see that single family homes are at .7 months supply this year (one year ago we had 9/10’s of a month), Condos have been the softer spot and currently have a 1.6mo supply down significantly from a year ago when we had 2.8 months, and townhomes are just like single family homes with .7 now vs .9 a year ago.
An interesting thing to me is that high end homes are seeing the market tighten up a lot now too. That area had more wiggle room last year, but it looks like that is no longer the case.
Broken down by price point
Median price by property type
If we take a look at prices we see what this high demand has done over the course of a year, single family homes are at a median price of $360,000 UP 10% year over year from $326,300 (emphasizing that this is a MEDIAN price for the entire metro area, obviously prices range widely!)
Townhomes show a similar increase of 8% from $240,000 a year ago to $259,900 now.
Condos despite being the soft spot ALSO rose in price – they are at $191,000 up 11.6% from $171,000 a year ago.
Demand side of the equation
The other side of the equation is DEMAND. What leads to this high demand?
A couple of things that I can think of the first of which are the low interest rates. The Fed is talking about raising them this year but even if they do, these changes are typically incremental as they test to see the effect on the markets for everything – not JUST homes.
If the rates rise a bit – even to 4%? will that tamp down the demand for homes?
I personally don’t think it will have an enormous effect, the demand is so high, and even 4% or 5% are STILL low interest rates. In the past I have paid interest at 8.25% for my first home, 6.5% for my second, we paid 4% and thought we had a steal when we moved to MN! Yes, we refinanced when the rates dipped again, but you get my point. It’s relative, and people want a place to live that belongs to THEM and gives them essentially rent control and a predictable expense PLUS the joys of having your own home.
The second factor in demand is the fact that a very large bubble of millenials is aging into a time when they want to do the things that people do in early adulthood – get married, have a family, BUY A HOUSE. This bubble, or boom, is driving demand for homes.
Tips for BUYERS
If you are thinking of selling, your property will likely get scooped up VERY quickly this year. If you are thinking of jumping into the pool to BUY, I have some advice:
1. Understand that you are going to be in a difficult situation, you aren’t the only one looking at a house and if you decide to offer on it you will be competing with many other people. Do your best.
2.) steal yourself for the process. If you don’t get the first home you offer on, it will likely hurt a bit, get back in the saddle and try again. SOMEONE wins every one of those multiple offer situations – that someone CAN be you. You just need to have the chops to hang in there and keep swinging. If I’m working with you, I’m going to have your back every step of the way and help you present your offer in a way that makes the seller say – YES – that one!
3.) very important! Look at homes listed UNDER your max price. Almost NOTHING goes for list price right now, so you need to put yourself in a position of being able to offer over list.
4.) A corollary to #3 is that you should save as much cash as possible so that you have that wiggle room to cover appraisal gaps or increase a budget and put a smaller percentage down if you need to.
5.) lastly, don’t stop looking at the times when everyone else has stopped looking! If it’s a holiday or WINTER, now is a good time to look because you are competing with fewer buyers even if the supply is lower, too. I love to look on holiday weekends – sign me up for Memorial Day! I’ve not really had a break over the Christmas season this year because listings are selling now as well as buyers getting homes while everyone else is hung over from too much egg nog. STAY IN THE GAME. Take advantage of the situation.
Offers that are getting accepted NOW
Let’s look at what types of offers are getting accepted right now according to Home Free Transaction Coordinators – what are sellers looking for and buyers offering in the effort to get a home?
Offer Acceptance Rate: 52% this indicates multiple offers to me. We have been quite low on this in the recent past – under 30%
Inspections were Waived 30% of the time – summer was over 50%, now seems like a good time to buy if you REALLY want an inspection
Pre-MLS Sales: 4.4%, these are sales that happen off market, private network of agents marketing them to each other.
Average Purchase to List Price is the lowest I’ve seen this year at 100.87%, this was up around 105% in summer!
Financing Types:
Cash 19% – this is the highest I’ve seen and I can say that it reflects my own personal experience recently.
Conventional loans 73% – still the big daddy, and always will be.
FHA 2% still tough to get these accepted and that kind of stinks, but when you’re going up against cash, I can’t blame a seller.
VA 4% this is the highest I have seen in a year at least.
USDA 1%,
Other 1%
Seller contribution to Closing Costs: 37.8%, this can be in lieu of fixing something.
Home Warranties included in the sale 5.6%
Offers Contingent Upon the Sale of the Buyer’s Property are at 6.7% – this is actually DOWN quite a bit, I believe not too long ago it was around 10-12%. Try to avoid this of possible. It’s really tough to get accepted.
If you’re exploring communities, check out my neighborhoods and suburbs playlist on YouTube to take a look at different areas of the metro.
Let me know if you have questions or comments – love to hear from you!
