What you need to know about our normalizing real estate market, including home prices, supply, and more.

DOWNLOAD OUR 2024 TWIN CITIES ANNUAL HOUSING REPORT

“How is the housing market right now?” I’ve been getting this question a lot recently, and I understand why. This is the time of year when people plan their moves for 2025, but it’s difficult to know what you should do without understanding where the market was in 2024 and where it’s at now.

The Twin Cities housing market saw its fair share of highs and lows in 2024, but it ended on a positive note, setting the stage for an even more active 2025. From rising mortgage rates to inventory surges and shifting buyer behavior, let’s take a closer look at how the year unfolded—and what’s ahead for the local real estate market.

A Strong Start with Rising Momentum

The year kicked off with optimism. Inventory levels were on the rise, mortgage rates had dropped from a 23-year high of 7.79% in October 2023 to the mid-6% range, and buyers were making a comeback. Nationally, existing home sales posted back-to-back increases in January and February for the first time in over two years.

But just as momentum was building, mortgage rates climbed again—surpassing 7% by April. This sudden spike put a damper on the traditionally busy spring market, causing many buyers to hesitate and sales to slow.

Summer Surge in Listings, But Prices Stay High

As summer rolled in, a wave of new listings pushed inventory to its highest level since 2020. Buyers had more options than they had in years, but this increase in supply did little to bring prices down. Nationwide, home prices continued to hit record highs, and sales remained sluggish.

However, the tide began to turn in the fall. By September, mortgage rates had dipped to a yearly low of 6.08%, and with inflation inching closer to the Federal Reserve’s 2% target, a series of interest rate cuts followed. The Fed ultimately lowered the benchmark rate by a full percentage point. Buyers responded quickly, and by October and November, home sales surged past four million units—the highest level since May.

Key Market Stats for 2024

Sales & Inventory

  • Pending sales increased 2.1% to 45,377.
  • Closed sales rose 1.8%, finishing at 45,145.
  • New listings jumped 8.2% to 64,496.
  • Active inventory declined 3.4%, with 6,712 homes available at year’s end.

Distressed Properties

  • Distressed sales made up only 1.1% of all closed transactions, a 3.7% decrease from the previous year.
  • Short sale prices saw a notable 20.8% increase year-over-year.

Showings & Buyer Activity

  • 743,429 showings took place in 2024.
  • Homes averaged 10 showings before going under contract—unchanged from 2023.
  • March saw the most showing activity, averaging 6.4 showings per listing.

Home Prices & Seller Trends

  • The median sales price increased 3.3% to $380,000.
  • Single-family homes rose 3.3%, while townhomes and condos increased 1.8%.
  • Sellers received 98.7% of their original list price, a slight 0.6% decline from 2023.
  • Single-family homes fetched 99% of the original asking price, while townhomes and condos averaged 97.6%.

Looking Ahead: 2025 Market Predictions

Economists anticipate a more active real estate market in 2025, with several key trends shaping the year ahead:

  • Home Sales Will Rise – As mortgage rates stabilize, more buyers will re-enter the market, pushing existing home sales higher.
  • Price Growth Will Moderate – While home prices are expected to continue rising, the pace will be more gradual compared to previous years.
  • Mortgage Rates Will Fluctuate – Rates are projected to stay within the 6% to 7% range, impacting both buyer demand and seller activity.
  • Inventory Will Improve – More single-family and multifamily construction is expected, further building on the inventory gains made in 2024.

What This Means for Buyers and Sellers

For buyers, a stabilizing mortgage rate environment and growing inventory could mean better opportunities in 2025. While prices will remain high, increased supply and fewer bidding wars may provide more negotiating power.

For sellers, pricing homes correctly and making strategic updates will be key to attracting buyers in an evolving market. While demand remains steady, today’s buyers are still sensitive to affordability challenges, making a well-prepared listing crucial.

Final Thoughts

The Twin Cities housing market experienced a dynamic 2024, marked by rate fluctuations, inventory shifts, and changing buyer behavior. As we head into 2025, the market is positioned for increased activity, with more homes hitting the market and mortgage rates likely to settle within a predictable range.

If you’re planning to buy or sell in the coming year, now is the time to strategize. Let’s connect and create a plan that works for you in this evolving market.

Would you like additional insights on your specific neighborhood or market trends? Feel free to reach out for a customized analysis!