Home sales in Minnesota rise as mortgage interest rates fall

More homes changed hands in Minnesota in September than the same time last year, as lower mortgage rates spurred more buyers.

Listings rose 4.9 percent across the state while pending sales increased 5.9 percent, according to data from the industry trade group, Minnesota Realtors. In the Twin Cities metro, listings rose 5.2 percent and pending sales rose 7.9 percent.

The average interest rate on a 30-year mortgage fell by about half a percent between June and September. St. Paul Area Association of Realtors President Jennifer Livingston says mortgage rates are a “huge” factor for potential buyers and sellers considering making moves.

“Even a small change in price can mean hundreds of dollars in savings per month for buyers, especially first-time homebuyers,” she said.

If interest rates fall further, more sellers could put their properties on the market, Livingston said.

“We have a lot of people who own properties with an interest rate of 4 percent or less, so they are less motivated to sell their home and buy a different property,” she said. “So we have this lock-in effect.”

If mortgage rates drop below 6 percent, the Twin Cities will see an increase in activity from buyers looking for homes priced at $400,000 or less, said Frank D’Angelo, president of the Minneapolis-area Realtors. This could, in turn, lead to more traffic among what he called “incremental homebuyers” looking for higher-priced properties.

“I would say that by early 2026, it will be achievable,” D’Angelo said.

Despite the increase in listings, he said sellers still generally have an advantage in the Twin Cities market, where supply doesn’t meet demand. The report from Minnesota Realtors described statewide and metro housing markets as “undersupplied.”

That proved true for Virginia Johnson of Roseville when she sold her home earlier this month.

“Sixty people, eight shows, four days,” she said outside an open house in suburban St. Paul. With the sale behind her, she was now more serious about buying. She is looking to downsize.

Lynn Flagstad and Amy Finken were also looking to buy. They want to sell the two-story house they bought in 1995 and switch to “bungalow living” as they get older. They had been looking for about six months for the right place in the Roseville area.

“Things are moving so fast, it’s been amazing,” Flagstad said. “We looked at one house and said, ‘They’re crazy. They’re going to get $400,000 for this house.” It sold in a day and a half.

However, recent data suggests that homes may not be exiting the market as quickly as they were last year. In the Twin Cities, homes spent an average of 44 days on the market, 12.8% more than in September 2024.

“Buyers have a little more breathing room than they did last year,” Livingston said. “So instead of having to make a decision in a matter of hours, buyers might have a few days to decide.”

But Emily Benz of Edina Realty said there’s a “tale of two markets” right now in the Twin Cities: While some homes are selling quickly with multiple offers, others are “struggling.”

“Buyers seem to prefer homes that are prefabricated and fully updated,” she said.

Timing is another factor. Competition for homes tends to decline between late fall and February, so winter can be a good time to buy, Livingston said. She advises first-time homebuyers to get pre-approved for a loan so they are prepared to act if they find the right home.

The median home price in Minnesota is $357,200. This is 2.1 percent higher than last year. In the Twin Cities, the median price rose 2.6% to $390,000.

Nationally, sales also jumped last month, rising 4.1 percent, compared to September 2024.

“September home sales showed an increase, but I wouldn’t call that a breakthrough,” said Lawrence Yun, chief economist for the National Association of Realtors. “It shows that consumers are responding to lower mortgage rates.”

The US housing market has been witnessing a decline in sales since 2022, when mortgage rates began to rise from historic lows. Sales of previously occupied homes in the United States declined last year to its lowest level in nearly 30 years.

Mortgage rates They began to decline in July in the run-up to the Fed’s decision resolution Last month to cut key interest rates for the first time in a year amid growing concerns about… Labor market in the United States.

Mortgage rates are likely to decline further through the end of the year, but potential homebuyers are likely to remain cautious amid uncertain economic conditions, said Lisa Sturtevant, chief economist at Bright MLS.

“The push and pull of lower interest rates and increased economic uncertainty means home sales activity is likely to remain flat through the fourth quarter, with total transactions for 2025 ending slightly higher than last year,” she said.