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More homes changed hands in Minnesota in September compared to the same time last year as lower mortgage rates motivated 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 were up 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 who are weighing whether to make moves.
“Even a small rate change can mean hundreds of dollars in monthly savings for buyers, specifically first-time home buyers,” she said.
If interest rates drop further, more sellers could bring their properties to the market, Livingston said.
“We have so many people that own properties with an interest rate of 4 percent or below, so they’re way less motivated to sell their home and buy a different property,” she said. “So we have this lock-in effect.”
Minneapolis Area Realtors President Frank D’Angelo said if mortgage rates drop below 6 percent, the Twin Cities would see a surge in activity from buyers looking for homes priced at $400,000 and lower. That could, in turn, lead to more movement among what he called “step-up homebuyers” who are looking for higher-priced properties.
“I’d say by early 2026, it’s achievable,” D’Angelo said.
Despite the increase in listings, he said sellers still generally have the advantage in the Twin Cities market, with supply not meeting demand. The report from Minnesota Realtors described the statewide and metro housing markets as “undersupplied.”
That proved true for Virginia Johnson of Roseville when she sold her house earlier this month.
“Sixty people, eight offers, four days,” she said outside an open house in the St. Paul suburb. With the sale behind her, she’s now more serious about buying. She’s looking to downsize.
Also looking to buy were Lynn Flagstad and Amy Finken. They want to sell the two-story home they bought in 1995 and switch to “single-floor living” as they age. They’ve been looking for about six months for the right place in the Roseville area.
“Things move so fast, it’s been astonishing,” Flagstad said. “We looked at one house and we were like, ‘They’re crazy. They’re going to get $400,000 for this house.’ And it sold in a day and a half.”
Still, the recent data shows homes may not be flying off the market as quickly as last year. In the Twin Cities, homes spent 44 days on the market on average, 12.8 percent more time than in September 2024.
“Buyers have a bit more breathing room than they did last year,” Livingston said. “So instead of having to make a decision within hours, maybe buyers have a couple days to make a decision.”
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 “languishing.”
“Buyers seem to be favoring fully-updated, turnkey houses,” she said.
Timing is another factor. Livingston said competition for homes tends to be lower between late fall and February, so winter can be a good time to buy. She advises first-time homebuyers to get pre-approved for a loan so they are ready to act if they find the right home.
The median price of a home in Minnesota is $357,200. That’s 2.1 percent higher than last year. In the Twin Cities, the median price is 2.6 percent higher at $390,000.
Nationwide, sales also jumped last month, rising 4.1 percent, compared with September 2024.
“The home sales in September showed an increase, but I would not characterize (it) as a breakout,” said Lawrence Yun, National Association of Realtors chief economist. “It does show that consumers do respond to lower mortgage rates.”
The U.S. housing market has been in a sales slump since 2022, when mortgage rates began climbing from historic lows. Sales of previously occupied U.S. homes sank last year to their lowest level in nearly 30 years.
Mortgage rates started declining in July in the lead-up to the Federal Reserve’s decision last month to cut its main interest rate for the first time in a year amid growing concern over the U.S. job market.
Mortgage rates will probably ease further through the end of the year, but prospective homebuyers are likely to remain cautious amid uncertain economic conditions, said Lisa Sturtevant, chief economist at Bright MLS.
“The push and pull of lower rates and rising economic uncertainty means that home sales activity is likely to remain steady through the fourth quarter, with total 2025 transactions ending only slightly above last year,” she said.
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