Why 2026 Finally Favors Twin Cities Homebuyers

It’s Getting More Affordable To Buy a Home in the Twin Cities

There’s finally a little good news for anyone who’s been priced out or sitting on the sidelines. Buying a home is getting more affordable—nationally and here in the Twin Cities Metro.

Monthly payments have started to come down, and the squeeze buyers have been feeling for the past few years is slowly loosening. Now, that doesn’t mean everyone can suddenly afford a home, but with how tough the market’s been, the improvement we’re seeing matters.

Affordability Is Finally Moving in the Right Direction

One of the best ways to see this shift is by looking at how much of a household’s income it takes to buy a home. According to Zillow, housing is typically considered affordable when it takes 30% or less of your monthly income to cover your expenses—that includes your mortgage payment, taxes, insurance, and basic maintenance.​

For the past few years, the math was well above that threshold in many markets, including the Twin Cities, and it made buying a home unachievable for many. Local and state data show that home prices rose much faster than incomes from 2012 through 2024, which steadily eroded affordability. But now, we’re slowly moving back toward a better balance as rates ease, price growth cools, and wages continue to grow.

We’re not all the way back to that 30%‑of‑income mark, but the typical payment on an average‑priced Twin Cities home is no longer jumping by hundreds of dollars every year the way it did from 2020 to 2023. That’s a meaningful shift from the very rapid run‑up buyers saw earlier in the cycle.

Why Affordability Is Improving

So, what’s driving the change? A lot of the focus lately has been on mortgage rates and how much they’ve come down over the course of the past year. But that’s not the only factor working in favor of buyers right now. Here are three trends benefiting buyers today:

1. Mortgage rates have eased. Rates are near their lowest level in more than three years, which helps lower monthly payments. In Minnesota and the Twin Cities, the typical payment on a home rose sharply when rates spiked in 2022–2023, so even a modest pullback in rates gives buyers more breathing room in their monthly budgets.

2. Home price growth has cooled. Prices aren’t falling in the Twin Cities, but they’re growing much more slowly than they were a few years ago. The average sales price in the Twin Cities Metro has been running in the mid‑400‑thousands and rose roughly 3–4% over the past year, instead of the double‑digit gains we saw earlier in the decade. That means buyers today aren’t facing the same sharp jumps in purchase prices, which helps keep monthly payments more manageable and buying more predictable.

3. Wages are growing faster than prices in many segments. Across Minnesota, incomes have continued to rise while home‑price growth has cooled, which improves “house‑buying power” even if mortgage rates don’t plunge. As First American’s Chief Economist Mark Fleming explains: “When income growth exceeds house price growth, house‑buying power improves—even if mortgage rates don’t decline meaningfully.”

None of this makes buying cheap, but it does explain why the math is starting to work a little better for buyers than it did even just a year or two ago. Put simply, the forces that hurt affordability—fast‑rising prices, spiking rates, and slower income growth—are finally easing.

What This Looks Like in the Twin Cities (Average Price + Days on Market)

National headlines can be helpful, but real decisions happen at the local level. Here’s a quick snapshot of how this is showing up in the Twin Cities Metro right now:

• The average sales price in the Twin Cities Metro has climbed into the mid‑400‑thousands, with the latest annual report showing the average price just under 470,000 dollars and up about 3–4% year‑over‑year.

• For a typical buyer with a standard down payment, that translates to a monthly payment in roughly the mid‑2,000‑dollar range at today’s rates—high, but more stable than the big swings we saw when rates first jumped.

• Cumulative days on market are growing compared with the frenzy years, with recent reports showing market times edging up into the 40–50‑day range in many Twin Cities communities instead of homes selling in a weekend.

That increase in days on market matters because it gives buyers more negotiation power. In many parts of the metro, sellers are no longer getting 5–10 offers on day one, which means buyers have more room to ask for inspection contingencies, closing cost help, or repairs instead of waiving everything just to win.

Where Homes Are Becoming Affordable First

Nationally, some markets are expected to fall back under that 30%‑of‑income affordability threshold by the end of the year. In the Twin Cities, progress may be more gradual because prices have held up better than in many other regions, but there are still pockets of improving affordability.

Analysts have noted that lower‑ and moderate‑income Twin Cities buyers saw the biggest affordability squeeze from 2020–2024 as rising prices and higher rates reduced the number of homes they could reasonably afford. As rates ease, incomes grow, and days on market lengthen, more of those buyers are starting to find opportunities—especially in outer‑ring suburbs, smaller homes, and townhomes where price growth has been more modest.

That doesn’t mean you have to wait until a certain index hits a magic number before you buy. Some Twin Cities neighborhoods are already seeing better affordability because of slightly softer price growth, more inventory at key price points, and sellers who are more open to negotiating on price and terms as their days on market stretch out.

Bottom Line

For the first time in quite a while, affordability is easing, and that’s true both nationally and here in the Twin Cities Metro. Average prices are still high, but they’re rising more slowly, rates have come down from their peaks, and homes are sitting on the market longer—giving buyers more leverage and more time to make smart decisions.

And because this improvement isn’t happening everywhere at the same speed—or at the same price points—understanding what’s changing locally is what really makes a difference. If you want to see how these trends show up in your specific city, school district, or price range here in the Twin Cities, let’s talk it through and run your numbers together.