The Market Didn’t Get Worse. It Just Didn’t Rebound.
If you’ve been watching the national housing headlines, you’ve probably seen the usual mix of optimism and confusion. Rates have improved a bit. Affordability has ticked higher. Inventory is no longer collapsing. The easy conclusion would be that the market should be bouncing back.
That is not what the February Twin Cities data says.
February 2026 did not bring a meaningful rebound. Prices held steady. Affordability improved again. Inventory rose modestly. But buyer activity is still weak, and closings remain well below last year.
The market did not crack. It also did not meaningfully recover.
Let’s dig in.
Prices Are Flat. Appreciation Has Basically Stalled.
The good news is that prices are not falling. The less-good news is that they are not really rising either.
• Median Sales Price: Flat year-over-year at $380,000.
• Price Per Square Foot: Up 0.6% to $211.
• ShowingTime Housing Value Index: Up 0.8% to $319,410.
The Takeaway: January already showed appreciation decelerating. February confirms it. The median sale price was unchanged from last year, and even the Housing Value Index is only up 0.8%. That is not price growth you feel. It is price stability.
If you are a seller assuming the market will hand you appreciation just for existing, the data says otherwise.
The Volume Problem Is Still the Story
This is still the part of the report that matters most.
• Closed Sales: Down 9.4% to 2,200.
• Pending Sales: Down 3.5% to 2,958.
• New Listings: Up just 0.4% to 4,570.
The Takeaway: February was better than January in one sense: the declines were smaller. But that does not change the bigger picture. Closed sales are still down materially, pending activity is still negative, and new listing growth is basically nonexistent.
This is not a market with strong momentum. It is a market that is functioning, but slowly.
The lock-in effect is still real. Sellers are not flooding the market, and buyers are still payment-sensitive enough that improved affordability has not translated into a real demand surge.
Supply Is Not Loose. It’s Just Slightly Less Scarce.
The inventory picture improved a little, but not enough to change the character of the market.
• Inventory: Up 2.0% to 7,946 homes.
• Months Supply: Flat at 2.1 months.
The Takeaway: There are more homes on the market than a year ago, but not by much. Months supply sitting at 2.1 tells you the same thing January told you at 1.9: this is still a supply-constrained market.
The difference is that February’s tightness looks a little healthier. In January, low months supply came alongside a sharp drop in both buyers and sellers. In February, inventory rose modestly and months supply stayed flat. That is less of a mathematical distortion and more of a genuine “still tight” signal.
Either way, this is not a buyer’s market.
Days on Market: No Improvement, No Deterioration
• Days on Market: 69 days, flat from last year.
The Takeaway: Buyers are still selective, but they are not frozen. The serious ones are transacting. The rest are waiting, watching, and doing payment math.
The fact that days on market did not rise further is actually notable given the weak closing volume. It suggests the listings that are properly priced are still moving, while the market quietly ignores the rest.
The Negotiation Gap Stabilized
• Percent of Original List Price Received: 97.4%, down from 97.7% last year.
• Median List Price: Up 2.4% to $420,000.
The Takeaway: Sellers are still listing with confidence. In fact, the median list price moved higher again after January’s dip. But buyers are not fully meeting them there, which is why the gap between ask and achieved price remains real.
At 97.4%, sellers are still getting paid. But they are not getting everything they want. That is the market’s way of saying pricing discipline matters.
For buyers, this is not a green light to throw out ridiculous offers. It is a reminder that leverage exists on the margin, especially when a property is stale or overreaching.
Affordability: The Bright Spot Kept Getting Brighter
• Housing Affordability Index: 131, up 7.4% from 122 last February.
The Takeaway: This is now two straight months of real improvement in affordability, and it matters. It is one of the only reasons the market is not weaker than it is.
An index of 131 means the median household income is 131% of what is needed to qualify for the median-priced home under prevailing rates. That is a meaningful improvement from much of 2025.
The problem is that affordability is improving into a market where confidence is still fragile. So buyers have more room, but they are not moving with urgency.
Mortgage Mix: Cash Is Still a Factor
From the mortgage utilization data, conventional financing remains dominant at 69.8%, cash purchases are 15.5%, and FHA sits at 8.1%.
The Takeaway: Cash is still a meaningful share of the market, but a little less aggressive than the 17.1% reading in January. That suggests the February market had a slightly broader financing mix, even if overall activity remained soft.
That matters most at the lower end, where financed buyers are still competing against cash and equity-rich households for the best inventory.
What Should You Do?
For Sellers: Your advantage is still supply, not momentum. There are not enough homes on the market for prices to fall apart, but there also is not enough buyer urgency for you to get sloppy. If your house is well-prepped and priced correctly, you can still win. If you reach, the market will make you pay for it in time.
For Buyers: The market is giving you a little more breathing room without giving you control. Affordability is better, inventory is a bit higher, and sellers are negotiating more than they were during the frenzy years. That is useful. Just do not mistake “less competitive” for “cheap.” It is not.
For Developers & Private Lenders: The structural undersupply thesis is still intact. Inventory is only 7,946 homes and months supply remains stuck at 2.1. That continues to support the long-term need for new housing. But the weak closings and soft pending numbers are the warning. Demand is not gone, but it is slower and more selective. Underwrite accordingly. Assume longer absorption, real incentives, and no free pass from spring seasonality.
This is still a market that rewards preparation over optimism.
How We’re Positioned
At Carpathian Capital Management, we invest in residential development projects in structurally undersupplied markets around the country, and the Twin Cities remains a good example of what that looks like in practice.
A market can have weak volume and still have a real housing shortage. February proves that. Closed sales are down, but months supply is still only 2.1. That creates opportunity for disciplined builders and disciplined capital, not for aggressive assumptions.
That is why our focus remains the same: back experienced sponsors, structure for downside protection, and invest where supply constraints still matter.
Data Source: Minneapolis Area REALTORS® | February 2026 Monthly Indicators
