Mortgage Rates Are Finally Doing Something Interesting (And Yes, It Matters in the Twin Cities)

For the first time in a while, the housing data is actually…interesting.

Mortgage rates recently dipped to a three-year low (around 6.06%) before ticking back up slightly to about 6.2%. That small move may not sound dramatic, but in real estate, tiny shifts in rates create big shifts in behavior.

And we’re starting to see it.

Nationally, pending sales and new listings are still down compared to last year — but the declines are shrinking. Mortgage purchase applications just jumped to their highest level in three years. That doesn’t happen unless people are getting off the sidelines.

In other words: buyers and sellers aren’t rushing back into the market… but they are leaning forward. And that’s always the first step.

What this means for the Twin Cities market

Even though showing activity is still running about 21% below last year, this is where context matters.

When rates fall, we don’t suddenly get chaos. What we get first is:

• more serious buyers booking showings

• more second looks instead of one-and-done

• more “maybe this spring” conversations turning into real plans

The Twin Cities market tends to respond fairly quickly to rate changes because prices here have stayed relatively stable. When the payment math improves, people don’t just look — they move.

We’re also seeing new listings nationally down only 1.6% year over year, the smallest drop since November. That’s a big tell. Lower rates don’t just help buyers — they free sellers who have been sitting on 3% mortgages, feeling stuck.

When sellers start to believe they can move without wrecking their monthly payment, inventory follows.

And inventory is what this market desperately needs.

But what about the luxury market?

Great question — and yes, lower rates absolutely matter, even at the high end.

Luxury doesn’t react emotionally. It reacts financially and psychologically.

Even buyers who could pay cash often choose not to. They leverage assets. They move money. They look at opportunity cost. And when rates come down, three important things happen in the $1M+ space:

1. The buyer pool quietly gets bigger

A one-point change in rates massively impacts jumbo payments. That brings qualified buyers back into the conversation who had stepped away last fall.

2. Homes stop feeling “stuck”

Luxury doesn’t usually surge — but it does thaw. Listings move. Price reductions slow. The good homes stop sitting there like unloved stepchildren.

3. Buyers start making decisions instead of waiting

Lower rates don’t create bidding wars. They create motion. And motion is what creates deals.

Luxury markets don’t need frenzy. They need confidence.

Falling rates help restore it.

The bottom line

The headlines will keep telling you the market is slow. And technically, year-over-year, that’s true.

But real estate turns quietly before it turns loudly.

Right now, the data says the market is shifting from watching to moving. And in my experience, that’s when the best opportunities show up — before everyone agrees the coast is clear.

If you’re a buyer, this is the window where leverage still exists.

If you’re a seller, this is the window where positioning matters more than competition.

And if you’re in the luxury space? This is when the ice starts cracking.

Markets like this reward people who plan before everyone else panics or piles in. If you’re even considering a move this year — whether that’s buying, selling, or both  — Talk to Tracy so you’re ready when the right opportunity shows up!