Is It a Good Time to Buy a House in Minnesota?

Minnesota’s housing market presents a dynamic landscape for potential homebuyers. Understanding this environment requires examining various data points and influencing factors. This analysis provides insights into current conditions, aiding individuals in making informed decisions.

Current Housing Market Metrics in Minnesota

Minnesota’s housing market is currently in transition, characterized by modest price growth, increasing inventory, and declining sales activity. In August 2024, the median sales price reached $352,000, a 1.7% increase year-over-year. By February 2025, the statewide median home price stood at $343,000, marking a 4.9% rise. The average sales price in August 2024 also increased 4.1%, reaching $422,974.

Inventory levels show an upward trend. In August 2024, the monthly supply increased to 3.0 months, a 15.4% rise from the prior year, with 16,165 homes available. As of January 2025, 13,786 homes were for sale, a 4% increase year-over-year, representing about three months of supply. While this growth eases some pressure, a balanced market requires a significantly larger increase.

The speed of home sales has varied. While homes went pending in 22 days in August 2024, by January 2025, they averaged 53 days on the market. More recent data from July 2025 shows a median of 18 days to pending.

Sales volume has seen some cooling. Both pending and closed sales decreased in August 2024, dropping by 10.2% and 9.5% respectively year-over-year. Despite this, statewide home sales rose just over one percent from 2023 to 2024. New construction influences overall supply, with areas like Duluth needing thousands of new housing units.

Economic Factors Influencing Minnesota’s Housing Market

Minnesota’s broader economic environment significantly shapes its housing market. A strong economy and thriving job market contribute to housing demand. Minnesota has attracted notable inbound migration, with over 2,000 residents searching for in-state homes between November 2024 and January 2025. New homebuyers from states like New York, California, and Illinois are drawn by Minnesota’s quality of life and employment opportunities.

Housing affordability remains a consideration for many. The Housing Affordability Index highlights challenges, as monthly mortgage payments have risen significantly since 2020. The overall cost of living in Minnesota is approximately 3.9% less than the national average, with a housing index 18% lower than the national median home price.

The stability of Minnesota’s industries underpins the state’s economic conditions, supporting consistent housing demand. Population trends, including a steady increase in residents, contribute to the ongoing need for housing units.

Financing Environment for Homebuyers

The current financing environment significantly impacts a homebuyer’s purchasing power and affordability. As of August 20, 2025, mortgage interest rates for a 30-year fixed loan are 6.375% to 6.78%. For a 15-year fixed mortgage, rates average 5.75% to 5.85%. Adjustable-rate mortgages (ARMs), such as a 5/1 ARM, have initial rates between 5.76% and 7.27%.

These rates are higher than record lows, such as the 30-year fixed rate of 2.65% in January 2021. The average 30-year mortgage rate in 2024 was around 6.7%, fluctuating between 6.1% and 7.1%. These higher rates directly increase monthly mortgage payments, limiting affordability. For instance, the typical payment on a median-priced Minnesota home, with a 10% down payment, rose from $1,450 in 2020 to $2,500 in 2024.

Lending standards for conventional loans require a minimum 3% down payment for first-time homebuyers, though some lenders prefer 5%. A 20% down payment avoids private mortgage insurance (PMI). Borrowers typically need a credit score of at least 620 for conventional loans, with scores above 700 often qualifying for more competitive rates. The debt-to-income ratio must be below 45%.

Regional Market Differences Across Minnesota

Minnesota’s housing market is not uniform, with conditions varying across its diverse regions. The Twin Cities metropolitan area, encompassing Minneapolis and St. Paul, has distinct market dynamics. By February 2025, the metro area’s median price reached $380,000. In August 2024, Hennepin County’s median sales price was $380,000, and Ramsey County’s was $330,000. Despite increased listings and inventory in 2024, the Twin Cities metro remained a seller’s market with about 1.5 months of housing supply.

Outside the Twin Cities, other major population centers present different scenarios. Duluth’s median sales figure rose to $292,000 in 2024. Homes sold quickly, averaging 19 days on the market. By July 2025, the median listing home price was $322,400, trending down 7.9% year-over-year. The average home value stood at $293,069, up 3.3% over the past year, with homes going pending in about 6 days. Duluth’s market is considered a seller’s market.

St. Cloud exhibits a competitive housing market. In July 2025, the median home price was $247,000, a 2.0% decrease from the previous year, with homes selling after 30 days. The average home value was $262,188, a 4.5% increase over the past year. Approximately 39.4% of homes sold above their asking price in July 2025, indicating strong competition.

Rural areas and recreational lake regions also have unique characteristics. In 2024, the median price in Cook County along the North Shore of Lake Superior was $440,000, while Lake County recorded $225,000. Regional forecasts suggest varying home value growth, with areas like Fergus Falls, Brainerd, and Bemidji projected to see increases by August 2025. These localized conditions underscore the importance of examining specific market data when considering a home purchase.