Minnesota’s housing market is reflecting the nation’s growing economic divide. First-time and entry-level buyers are struggling with high prices and limited inventory. On the other hand, wealthier households are keeping the luxury market busy and driving prices up.
Recent reports from real estate associations in the Twin Cities and across Minnesota show that the market is slowing down overall, but prices are still high. The slowdown is most noticeable for lower-priced homes, where many buyers are held back by affordability issues. Meanwhile, demand from move-up and luxury buyers remains strong.
Fewer Sales, Higher Prices
In November, home sales across the 16-county Twin Cities metro declined compared with the same period last year. Buyers signed 3,072 purchase agreements, representing a 2.4% year-over-year decline. Closed sales, which reflect buyer activity from earlier months, fell even more sharply, declining 5.6%.
Despite the slowdown in transactions, prices continued to climb. The median sale price of homes that closed in November reached $387,000, a 2.9% increase from 2023. That disconnect between falling sales and rising prices highlights a market constrained more by supply than demand, particularly in desirable neighborhoods.
Industry observers say cautious buyers, a limited number of sellers, and sustained demand at higher price points are all contributing to the trend.
Inventory Remains Tight
One of the defining features of Minnesota’s housing market remains the lack of available homes. New listings in November were largely unchanged from a year earlier, meaning buyers had no meaningful increase in options. In fact, by the end of the month, the total number of homes on the market was slightly lower than last year.
In some parts of the Twin Cities, especially areas with top-performing school districts or established neighborhoods, competition remained intense. Buyers vying for a limited number of listings often found themselves paying at or above asking price, even as overall sales volume declined.
According to Minnesota Realtors leadership, buyers are adapting by expanding their search criteria.
“Today’s buyers are looking more broadly than they would have a few years ago,” said Patti Jo Fitzpatrick, a sales agent and president of Minnesota Realtors. “They’re considering different neighborhoods, housing styles, and property types to find something that fits both their needs and their budget.”
While bidding wars are less common than during the height of the pandemic market, sellers are still achieving strong outcomes, Fitzpatrick noted.
Entry-Level Buyers Pull Back
The slowdown is most evident among first-time buyers and those shopping in the lower price ranges. Pending sales, a forward-looking indicator, declined for the second consecutive month, marking the steepest drop since spring.
Statewide data show that certain housing categories were hit particularly hard. Pending sales of newly built homes fell 9.1%, while townhouse sales declined 5.1%. These segments often attract younger and first-time buyers, many of whom have been priced out by rising mortgage costs and high home values.
Throughout 2025, sales of the least-expensive homes in the Twin Cities have steadily declined. For many renters hoping to become homeowners, the math simply no longer works.
Luxury Market Defies the Slowdown
While the lower end of the market struggles, the opposite is happening at the top. Sales of homes priced above $1 million rose by more than 17%, continuing a trend that has persisted all year. These gains are large enough to influence overall market statistics, helping push median prices higher even as fewer homes sell overall.
Move-up buyers, homeowners who already have equity from previous purchases, are largely insulated from the affordability pressures facing first-time buyers. Many are using the proceeds from a prior sale to offset higher interest rates, allowing them to compete more effectively.
Luxury buyers also benefit from significantly more inventory. At the current pace of sales, there is nearly five months’ worth of homes available in the $1 million-plus category. That is roughly double the supply available to buyers in more affordable price ranges.
Homes Taking Longer to Sell
Another sign of a shifting market is the increase in the amount of time homes spend for sale. Across the Twin Cities metro, homes took an average of 50 days to sell in November, unchanged from October but longer than during the market’s most competitive years.
Statewide, the average rose to 56 days, a slight increase from last year. However, that average masks wide variation by property type. Single-family homes sold relatively quickly, averaging 53 days, while condominiums took nearly twice as long to find buyers.
These differences reflect both buyer preferences and affordability realities. Condos, often viewed as entry points to homeownership, have been hit particularly hard by higher monthly costs and homeowner association fees.
Mortgage Rates Remain a Headwind
Mortgage rates have eased slightly, hovering around 6%, their lowest levels in nearly a year. Still, rates remain well above the historic lows seen during the pandemic, and many buyers remain hesitant.
“Buyers are hopeful, but they’re also realistic,” said Frank D’Angelo, president of Minneapolis Area Realtors. “Inventory is still tight, and even though rates are down from their recent highs, they don’t feel cheap.”
That sentiment has shaped buyer behavior heading into 2026. Many households are choosing to wait, hoping for either lower borrowing costs or more favorable prices, neither of which appears imminent.
A Market Split by Income
The overall picture emerging from Minnesota’s housing data is one of imbalance. Those with higher incomes or significant home equity continue to find opportunities, while entry-level buyers face mounting barriers.
Pending sales for homes priced between $190,000 and $350,000 declined about 4%, reinforcing the challenges at the lower end of the market. Meanwhile, sustained luxury activity continues to skew pricing metrics upward.
This divergence has broader implications. As first-time buyers delay homeownership, long-term wealth-building opportunities become increasingly concentrated among higher earners, reinforcing existing economic gaps.
Looking Ahead
As Minnesota moves toward 2026, market observers expect many of these trends to persist. Inventory remains constrained, mortgage rates are unlikely to return to pandemic-era lows, and affordability pressures continue to weigh heavily on younger buyers.
At the same time, demand among affluent households shows little sign of retreating. That dynamic suggests prices may remain elevated even if overall sales volumes soften further.
As of now, Minnesota’s housing market is not collapsing. However, it is clearly slowing, and the benefits of ownership are becoming increasingly unevenly distributed.
