VOL. 9 ISSUE 3, SEPT. 2025
THE MINNESOTA HOUSING INDUSTRY NEWS SOURCE BY HOUSING FIRST MINNESOTA • HOUSINGINDUSTRYNEWS.ORG
INSIDE THIS ISSUE
Minnesota housing market at midyear: Record prices, stubborn rates, and builder uncertainty
Minnesota lawmakers honored with Housing Leadership Awards
Halfway through 2025, Minnesota’s housing market is sending mixed signals. Prices continue to climb to record highs, mortgage rates have eased slightly but remain elevated and builders are navigating a cautious environment marked by uneven demand. Prices reach new milestones The cost of a home in Minnesota has never been higher. According to Minnesota REALTORS®, the statewide median sales price in June reached $370,000, a 4.2% increase from last year. In the Twin Cities metro, the median crossed the $400,000 mark for the first time. Single-family homes now average $449,000 in the metro, with newly built homes averaging more than $520,000. The pace of appreciation has quickened. It took eight years for metro prices to climb from $200,000 in 2012 to $300,000 in 2020. But just five years later, the median has grown another $100,000, underscoring both persistent demand and ongoing affordability challenges. Sales activity has been steady: pending sales rose 3.7% statewide in June, while existing-home sales in the Twin Cities increased 5.5%. Sellers in the metro continue to see strong offers, averaging 100.7% of list price. Mortgage rates flat, but easing slightly Mortgage rates have held in a narrow range for more than a year, staying between 6.5% and 7%. Recently, there has been some modest relief. Freddie Mac reported the average 30-year fixed rate at 6.58% in early August, the lowest levael since October 2024.
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Industry celebrates completion of Elevate Hope House PAGE 14
Veteran Village builds momentum PAGE 18 The newly adopted code could add an estimated $13,000 to the cost of a two-story home.
Energy code review leaves industry on edge Despite record-high unaffordabilty, new Minnesota energy code could make housing more costly For the past two years, the Department of Labor and Industry (DLI) has been working on the next residential energy code—the first energy code change since 2014. The state’s Technical Advisory Group (TAG) is expected to wrap up its work by early fall. This discussion comes after a law passed by the Minnesota Legislature in 2024 that requires greater energy efficiency, moving to a 70% increase in efficiency from 2006. This law requires that beginning in 2026, the DLI commissioner will adopt the latest International Energy Conservation Code (IECC) or a more efficient standard every three years, with energy codes from 2026 to 2038 incrementally moving towards this goal.
Costly update expected A lot has changed since Minnesota implemented an amended version of the 2012 IECC. While the state’s next residential energy code is far from finished, DLI cannot adopt any weakening amendments, giving a clear picture of the minimum changes that will be approved. Significant changes in the 2024 IECC and passed code change proposals include address-specific Manual JDS, continuous R-5 insulation (or equivalent total UA), a shift to 0.27 U-factor for windows in all climate zones, increased foundation insulation and automated lighting controls. Industry members are beginning to worry about the cost, with estimates
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of more than $7,500 for a townhome and more than $13,000 for a two-story home. “We already have the most expensive new homes in the region,” said Nick Erickson, senior director of housing policy for Housing First Minnesota. “Adding another $13,000 in the middle of a housing crisis will grow the state’s housing deficit.” Minnesota: Nation-leading in efficiency According to RESNET, which tracks new home efficiency across the United States and Canada, Minnesota is the national leader in efficiency for states
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Edina tree fees challenged in court Housing First Minnesota has filed a civil lawsuit in Hennepin County District Court challenging the City of Edina’s tree-related fees. Under current city rules, builders, property owners or developers must submit a “tree protection plan” and deposit into escrow 110% of the value the city assigns to tree replacement. If replacement trees are not planted, the city may retain these funds without a requirement to CONTINUED >> PAGE 6
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