Mortgage Market Update - February 2025

The mortgage market has continued to evolve in early 2025, presenting both challenges and opportunities for homebuyers, homeowners, and industry professionals. Here’s a look at the key trends shaping the landscape this month, with a focus on Minnesota’s market conditions.

1. Mortgage Rates Stabilize

After significant volatility in 2024, mortgage rates have begun to stabilize. As of mid-February, the average 30-year fixed mortgage rate hovers around 6.4%, slightly down from last month (Source: Freddie Mac Primary Mortgage Market Survey – February 15, 2025). This stabilization provides a window of opportunity for potential buyers and refinancers looking for predictability. However, January rates averaged about 7.0%, the highest level since May 2024, which continued to constrain buyer activity across many markets.

2. Housing Inventory and Seller Activity

Sellers are becoming more active across Minnesota. According to data from the Minnesota REALTORS® and Minneapolis Area REALTORS® Associations (Sources: Minnesota REALTORS® Monthly Indicators Report – January 2025; Minneapolis Area REALTORS® Market Update – February 2025), new listings rose 8.4% statewide and 8.3% in the Twin Cities compared to last year. This increase gives buyers more options, though inventory remains below pre-pandemic levels, keeping competition moderate. Notably, every month of 2024 had more inventory than the year prior, indicating gradual improvement. Sellers with significant equity are more likely to list despite holding low-interest loans from previous years.

3. Buyer Activity and Affordability Challenges

Despite more listings, buyer activity has softened. Signed purchase agreements fell 4.9% statewide and 5.1% in the metro (Source: Minnesota REALTORS® Market Metrics – January 2025). Affordability challenges persist, with buyers facing elevated mortgage rates, higher home prices, and limited choices. First-time buyers feel this pressure most acutely. According to Patti Jo Fitzpatrick, President of Minnesota REALTORS®, “Today’s buyers can be more selective but should expect increased competition if rates drop further this spring.”

4. Home Prices and Market Dynamics

Home prices continue to rise, albeit at a slower pace. The statewide median sales price increased 4.8% to $330,000, while the Twin Cities metro median rose 5.0% to $370,000 (Sources: Minnesota REALTORS® Housing Statistics – January 2025; Minneapolis Area REALTORS® Local Market Reports – February 2025). Sellers accepted offers at an average of 96.0% of list price statewide and 96.9% in the metro, the highest January levels since 2022. Despite strong seller positioning, homes are spending longer on the market, averaging 56 days statewide and 66 days in the metro (Source: Minnesota REALTORS® Monthly Housing Report – January 2025). Regional variances remain significant:

• Faster sales: Duluth, Rochester, and Willmar
• Longer market times: Shorewood and White Bear Township
• Most affordable areas: Hibbing/Virginia and Grand Rapids
• Highest-priced markets: Deephaven and Tonka Bay (Sources: Minnesota REALTORS® Regional Market Data – January 2025; Minneapolis Area REALTORS® Economic Update – February 2025)

5. Economic Outlook and Regional Insights

Steady job growth and moderating inflation continue to influence the mortgage market (Source: Minneapolis Area REALTORS® Economic Update – February 2025). Buyer sentiment remains rate-sensitive, with many tracking daily fluctuations. According to Jennifer Livingston, President of the Saint Paul Area Association of REALTORS®, “There’s a growing sense of optimism. As we head into spring, the market is gradually rebalancing, offering more opportunities for both buyers and sellers.”

Tips for Homebuyers and Homeowners:

✅ For Buyers: Stay pre-approved, monitor rate trends, and consider flexible location options to find better value. ✅ For Sellers: Leverage rising home values, but price strategically to attract offers quickly. ✅ For Homeowners: Refinancing may still offer benefits, especially for those with adjustable-rate loans.

Partner with Servion

At Servion, we understand the complexities of the mortgage market. Our team is ready to provide personalized guidance tailored to your needs. Whether you’re buying, refinancing, or simply exploring your options, we’re committed to helping you navigate the journey with confidence.

📞 Contact us today to learn how we can support your homeownership goals.

Sources:

• Minnesota REALTORS® Monthly Indicators Report – January 2025
• Minneapolis Area REALTORS® Market Update – February 2025
• Freddie Mac Primary Mortgage Market Survey – February 15, 2025
• Minnesota REALTORS® Housing Statistics – January 2025
• Minneapolis Area REALTORS® Local Market Reports – February 2025
• Minnesota REALTORS® Market Metrics – January 2025
• Minnesota REALTORS® Regional Market Data – January 2025
• Minneapolis Area REALTORS® Economic Update – February 2025
• Minneapolis Area REALTORS® Market Insights – February 2025

Stay tuned for more market updates throughout 2025!