Minnesota’s Housing Market: Summary of Q1 2023

By MNR News posted 04-17-2023 01:07 PM

As 2023 got underway, both homebuyers and sellers were still adjusting to higher mortgage rates—the 6.27% rate on a 30-year fixed mortgage is significantly higher than the 3.62% rate of January 2022. That jump in interest rates, along with ongoing high inflation and our chronic inventory shortage, continues to define Minnesota’s normalizing real estate market.

Though inflation is still squeezing potential home buyers in our state, the 5% rate that closed Q1 is a steady improvement from the 6.4% mark we saw to begin the year. Calming inflation often leads to lower mortgage rates eventually, according to expert economists. If inflation and interest rates continue to stabilize or fall in the coming months, we could see affordability improve.

As we’d expect, median sales prices rose month over month in Q1, a normal trend as we move from the winter to the spring market here in Minnesota. That said, the pace of growth in the median sales price is not what it’s been in recent years, yet another sign that the pandemic housing market boom has seen its peak come and go.

The inventory shortage looks a little better at the close of Q1 this year—1.5 months supply vs. just one month’s supply in March 2022. But that is still woefully short of the 4–6 months supply needed for a balanced market. So long as housing inventory remains low, we are unlikely to see significant price declines here in Minnesota. 

Inflation statistics: U.S. Inflation Calculator 

Mortgage rates statistics: Freddie-Mac (30-Year Fixed)