Twin Cities Housing Market: A Reset Year and What Comes Next

2025 was a year of normalization for the Twin Cities real estate market. Prices kept rising (up 2.6%), inventory inched higher, bidding wars cooled, and buyers finally gained a bit of leverage. The median price crossed $400K for the first time—yet appreciation still outperformed most U.S. metros.

Mortgage rates remain the biggest hurdle, but cracks are forming. Rates dipped below 6%, the lock‑in effect is weakening, and more sellers are re‑entering the market.

Looking ahead to

·       Modest price growth

·       Slightly more inventory

·       Stronger sales—especially if rates fall below 5.75%

·       Flat housing starts

Affordability challenges remain, but the direction is improving. The market isn’t back to “normal” yet—but it’s getting closer.