Mid-year real estate market check-in with Sharry Schmid

Key insights

• The first half of 2025 has been a more traditional spring market.
• While the overall market is healthy, affordability challenges persist.
• Mortgage interest rates are likely to fall in the coming months.
• Insurance is playing a bigger part in real estate transactions and is sometimes creating challenges.

The real estate market remains a topic of conversation for many, and especially for those of us in the industry, it is finally one we recognize as being more traditional in terms of activity and seasonality. Here’s a look at the market so far this year and what I think we can expect in the next few months.

Sales and market trends

We’re well into the second quarter of 2025 and in the middle of what is traditionally the busiest time of year for buyers and sellers. As I mentioned, the market has been more typical and one I would characterize as healthy. While there has been volatility in other areas of financial markets, housing remains a solid investment and one that consumers continue to bet on (and build their lives and wealth on).

There have been some national reports of a market shift favoring buyers, and while things are moving in that direction, significant changes tend to occur in coastal markets like Florida and Texas, while the Midwest remains much more stable. Locally, we’re still solidly in a seller’s market, but we’ve seen slow and steady growth in listing inventory, giving buyers some breathing room and a little more time to make decisions. We have just under two and a half months’ supply of homes for sale, a metric that would need to double to be considered balanced. Remember, a seller’s market favors a home seller (lower supply, higher demand), and a balanced market places buyers and sellers on equal footing.

Homes that are turn-key, well-priced and in desirable areas are still attracting multiple offers in some cases, but sellers are seeing a bit more competition overall. The bottom line is that real estate is always hyper-local, and what is true in one neighborhood may not be the case in another, so a professional’s insights are invaluable.

Affordability challenges persist

One of the most notable trends in recent years has been the rising median age of the first-time homebuyer. At 38 years old, today’s first-time buyer is older than their predecessors and has often delayed purchasing due to affordability, according to the National Association of REALTORS’^Ⓡ 2024 Profile of Home Buyers and Sellers report.

According to data reported by the National Association of REALTORS, households that earn $100,000 annually can afford just 37.1% of home listings nationally, down from 64.7% in 2019. The median sale price for a home sold in the United States in the first quarter of 2025 was $416,900, according to data compiled by the Federal Reserve. The median sale price in the Twin Cities area was $398,900 in April, according to Minneapolis Area Realtors.

Home prices will likely continue rising throughout the year. However, rates of appreciation are expected to be more moderate at around 3-4%.

What to expect from mortgage interest rates

Not surprisingly, mortgage interest rates continue to be a primary consideration for many buyers and sellers. As of June 5, the average 30-year fixed rate was at 6.85%, according to Freddie Mac. While that’s down from 7.03% a year ago, many people recall the ultra-low rates of recent years and wonder whether they should wait for rates to decline further.

As I’ve shared before, when looking at historic trends, those low rates are an exception and unlikely to return. In a recent report, Fannie Mae predicted that while rates will continue to trend downward in the coming months, they will likely hover around 6%, well above the rates of a few years ago.

Get in touch with a mortgage consultant to explore the options available to you, which might include the option to buy down interest rate points or refinance in the future, before you make any decisions based solely on rates.

What about insurance?

It’s no secret that insurance prices and premiums have been on the rise over the past few years, and you may have read headlines or talked to friends who have expressed concerns about insurance impacting their home sale or purchase. While it’s true that insurance is playing a bigger role in home sales (especially in coastal markets) and is sometimes challenging, it is not a deal-breaker for most buyers and sellers.

There are a variety of factors that carriers consider when determining coverage and rates, including home, owner and coverage factors, as explained in a helpful article from Edina Realty Insurance. Don’t anticipate that you can’t buy or sell because of insurance. There are a lot of solutions, and sometimes planning ahead, especially where the roof is concerned, is the best first step to ensuring you can move forward in your sale or purchase. The best thing you can do is to understand your options.

Talk to an expert

While I can provide an overview of the market, the best thing you can do as a buyer or seller is to contact a professional REALTOR^Ⓡ and have them provide hyper-local, customized information. Reach out to Edina Realty anytime to be connected with someone who can help you move forward.