2025 Housing Market in Review

As 2025 wraps up, let's see how expert predictions stacked up against reality. and what it means for your plans in 2026.

Dip in Mortgage Rates

While some experts were overly optimistic, anticipating rates in the high 5% range, The National Association of Realtors (NAR) correctly forecasted rates around 6%. We dropped from an average of 7% in 2024 to about 6.2% now - a meaningful improvement, even if it's not the dramatic plunge buyers wanted. Expect rates to hover around 6% through 2026.

The Inventory Squeeze Continues

We all hoped more homes would flood the market this year. While some markets saw relief, the Twin Cities metro is still sitting at just 2-3 months of inventory when we need 4-6 months for a balanced market. What does this mean? Sellers maintain the upper hand, and that's unlikely to change in 2026.

Steady Price Increases

No surprises here; average home prices rose 3.7%, right on trend. Look for similar growth in 2026, unless mortgage rates unexpectedly drop - which could accelerate price increases as more buyers jump in.

The Big Picture

2025 delivered stability, and 2026 looks similar. While sellers still have the advantage, we're seeing homes sit longer on the market and buyers gaining negotiating power. Affordability remains challenging and inventory tight, but the dream of homeownership is alive and well.

Ready to make your move? Whether you're buying or selling, I'm here to help you navigate the 2026 market and turn your real estate goals into reality.