Housing affordability continues to be a major concern. Typical monthly mortgage payments have climbed sharply, now averaging around $2,500—up significantly from pre-2020 levels. This increase is largely due to higher mortgage rates. A growing number of families, both homeowners and renters, are spending more than is considered affordable on housing.

Some smaller markets in the state, such as Fergus Falls, Brainerd, and Bemidji, are expected to see modest home price increases over the next year. On the other hand, areas like Grand Forks, Marshall, and parts of Minneapolis could experience slight declines. Forecasts for the Twin Cities vary, with projected growth ranging between 0.2% and 6%, depending on different economic models and expert opinions.

New construction, especially in the multifamily sector, is expected to slow down in 2025. Rising costs and elevated interest rates have made it more difficult to launch new projects. However, housing inventory overall has grown by 10% in recent months, giving buyers more choices and potentially easing some pressure on pricing.

The Minnesota housing market in 2025 is expected to maintain stability with regional variation. Some areas will see price appreciation, while others may flatten or dip slightly. Affordability will remain a key issue, but increased inventory and possible changes in interest rates could offer some relief to buyers.