January 2026 Market Insights

Key insights from December 2025 (compared to December 2024)*

• New listings: 2,564 | -4.0%
• Inventory: 7,216 | -4.0%
• Months’ supply: 1.90 | -5.0%
• Pending sales: 2,352 | -10%
• Median sales price: $380,000 | +3.0%
• Closed sales: 3,419 | +1.8%
• Days on market: 58 | +4.0%

The highlights

• December saw reduced market activity overall, which is reflective of more typical seasonality
• Higher mortgage rates, rising costs and a lack of affordable housing kept some from entering the market this past year.
• 2026 is expected to show moderate gains with mortgage rates around 6% and a more stable market.

December saw a marked decrease in real estate market activity, likely due to weather (snow!) and holidays that fell in the middle of back-to-back weeks. New listings, pending sales and inventory levels all fell, while closed sales, days on market and the median sales price increased to close out December at $380,000. The seasonality of market activity in December was much more typical, with buyers and sellers likely betting on their future selves to take action in the coming spring months.

While higher mortgage rates and affordability challenges persisted throughout 2025, buyers and sellers still entered the market at a higher rate overall than the previous year, contributing to a 2.4% and 2.3% increase in closed sales in Minnesota and the Twin Cities, respectively. Sellers were a bit more active than buyers because they had an easier time moving up due to existing home equity. This led to positive movement towards a more balanced market, which still favored sellers by the end of the year, but offered buyers more choices and time to make decisions. Still, some sellers chose to wait, extending their tenure in their homes to the highest average in 40 years -- spending about 11 years in their current home. Some seller inaction can be attributed to the lock-in effect, where homeowners with a ~3% interest rate are reluctant to move because their next loan would come at a higher rate. As we’ve moved further away from the pandemic era, the lock-in effect has softened significantly and will continue to recede in time.

Higher mortgage rates and increased sales prices made it difficult for first-time buyers to make offers last year, especially when paired with inflation, student loan debt and uneven economic opportunity. According to the National Association of REALTORS® (NAR), the average age of a first-time homebuyer reached a record high of 40 years old in 2025, with first-time homebuyers making up just 21% of all home buyers by mid-2025.

According to US Census data, Minnesota has the highest homeownership rate in the nation (50.80%) for people under 35, and an impressive 71% of households own their homes, which bodes well for wealth building and community stability.

2026 is expected to show improvements in real estate activity. Mortgage rates are predicted to hover around 6% for the year. With inventory growing, there may be some small gains in housing affordability. Experts believe that this year will be more favorable to buyers and lead to a more active market.

Economic check up

• Minneapolis-St. Paul area unemployment rate: 3.7% (as of November 2025)
• Average rates for 30-year conforming mortgage 6.09%**

Ready to help

We are here to help you confidently navigate your housing needs, now and always. Whether you are researching future options, or your circumstances require immediate action, reach out to an Edina Realty agent today for guidance.

*Data courtesy NorthstarMLS for the 16-County Twin Cities metro area for December 2025.

**Data sourced from Freddiemac.com for informational purposes only. Please contact your mortgage consultant for any questions related to specific loan transactions.

Where you live

Edina Realty serves locations across Minnesota and western Wisconsin. Here’s a look at the market indicators where you live. All % changes are year-over-year.

Alexandria Area

• New listings: 37 | +3%
• Inventory: 187 | +3%
• Months’ supply: 2.30 | No change
• Pending sales: 52 | +21%
• Avg. sales price: $405,469 | +18%
• Days on market: 76 | +31%

Brainerd area

• New listings: 159 | -20%
• Inventory: 1,103 | -6%
• Months’ supply: 2.80 | -10%
• Closed sales: 314 | +10%
• Avg. sales price: $370,937 | +3%
• Days on market: 59 | -6%

Lake Superior area

• New listings: 114 | -19%
• Inventory: 768 | +12%
• Months’ supply: 2.80 | +8%
• Pending sales: 247 | +16%
• Avg. sales price: $307,979 | +3%
• Days on market: 41 | -2%

Southeast Minnesota area

• New listings: 256 | +2%
• Inventory: 958 | +7%
• Months’ supply: 2.20 | +5%
• Closed sales: 406 | Minimal
• Avg. sales price: $323,656 | +3%
• Days on market: 48 | +4%

St. Cloud area

• New listings: 79 | +32%
• Inventory: 251 | +28%
• Months’ supply: 2.20 | +29%
• Pending sales: 71 | -11%
• Avg. sales price: $293,306 | +7%
• Days on market: 44 | -10%

Mankato area

• New listings: 77 | +1%
• Inventory: 382 | +19%
• Months’ supply: 2.80 | +22%
• Pending sales: 72 | -23%
• Avg. sales price: $277,593 | -6%
• Days on market: 83 | +5%

Northwestern Wisconsin area

• New listings: 174 | -12%
• Inventory: 1,224 | -1%
• Months’ supply: 3.10 | -9%
• Closed sales: 335 | +8%
• Avg. sales price: $307,618 | -3%
• Days on market: 101 | +4%

West Central Minnesota area

• New listings: 129 | -1%
• Inventory: 676 | +6%
• Months’ supply: 3.20 | +3%
• Pending sales: 143 | +3%
• Avg. sales price: $235,601 | +16%
• Days on market: 61 | +3%

Bemidji area

• New listings: 17 | +31%
• Inventory: 149 | +1%
• Months’ supply: 3.60 | +6%
• Pending sales: 16 | -24%
• Median sales price: $227,500 | -24%
• Days on market: 57 | -10%

Leech Lake and surrounding area

• New listings: 21 | +110%
• Inventory: 150 | +28%
• Months’ supply: 3.30 | +18%
• Pending sales: 20 | -17%
• Median sales price: $396,000 | +6%
• Days on market: 51 | +42%

Little Falls area

• New listings: 7 | -46%
• Inventory: 38 | +12%
• Months’ supply: 2.20 | +10%
• Pending sales: 11 | No change
• Median sales price: $209,900 | +15%
• Days on market: 19 | +138%

Southwest Minnesota area

• New listings: 50 | -7%
• Inventory: 301 | +9%
• Months’ supply: 3.60 | -3%
• Pending sales: 67 | -4%
• Median sales price: $170,000 | +9%
• Days on market: 73 | +3%

Headwaters area

• New listings: 35 | +13%
• Inventory: 348 | +14%
• Months’ supply: 3.70 | -10%
• Pending sales: 34 | -21%
• Median sales price: $285,750 | +3%
• Days on market: 75 | -31%