Twin Cities region misses its housing marks

In an unfortunate first, the Twin Cities region has failed to meet three annual goals related to housing production and homeownership. That’s the key takeaway from the most recent update to our Regional Housing Affordability Dashboard, a tool that tracks the region’s progress toward these goals, alongside other indicators measuring the health of the housing market. Those other indicators offer further evidence that the region’s housing market is trending toward a less affordable future.

Data tool tracks three regional goals

Working with the Itasca Project, an employer-led civic alliance in the Twin Cities region, the Federal Reserve Bank of Minneapolis launched the Regional Housing Affordability Dashboard in 2022. Its main purpose is to measure progress toward three goals that respond to the Itasca Project’s Housing Affordability Task Force. These goals challenge the seven-county Twin Cities region^* to:

• Supply 18,000 new housing units per year;
• Meet a goal set by the Metropolitan Council—the regional policymaking body, planning agency, and essential-services provider—of producing 2,090 new affordable housing units per year; and
• Match the 2020 national Black homeownership rate of 45 percent by 2030.

In addition to tracking these three goals, the dashboard monitors a range of housing indicators for the larger, 15-county Minneapolis-St. Paul metropolitan statistical area (MSA), as well as for 11 peer MSAs identified by GREATER MSP, a regional public-private economic development partnership. These indicators enable affordability comparisons between the Minneapolis-St. Paul MSA and other MSAs around the country.

The Regional Housing Affordability Dashboard is a core part of our efforts to understand how housing markets are working broadly within the Ninth Federal Reserve District and specifically within the district’s most populous metropolitan area. Housing is the largest line item in most household budgets. To pursue the Federal Reserve’s dual mandate from Congress of promoting maximum employment and stable prices, we need to know how Americans’ options for housing affordability are changing over time.

Housing production falls short for the second year in a row

In a 2020 report containing its recommendations, the Itasca task force called out, “Simply put, our region must build more housing. Only then will housing become more affordable. For the MSP region to meet its projected future growth and make up for a decade of underbuilding, we will need to produce a total of nearly 18,000 housing units per year.”

The goal represents a return to production levels seen in the opening years of this century. Those years closed out a three-decade span, from 1975 through 2004, when the region added an average of nearly 17,000 housing units per year. In the final year of that span, production was nearly 21,000 units. It then dropped below 18,000 in 2005 and stayed there through 2018. During that 14-year period, the region added an average of just over 11,000 housing units per year.

As the Twin Cities region’s production declined, its population continued to grow. Home prices and rents rose.

Developers permitted 85,245 new units in total over 2019, 2020, 2021, and 2022, surpassing the 18,000-unit goal for four consecutive years. But more recent data show a drop. In 2023, production fell below the 18,000-unit goal, to 15,596. In 2024, production fell again, to 12,339. In 2025, the year reflected in our latest dashboard update and also the most recent year for which this data series is available, production slipped further, to 12,161. (See Figure 1.)

In 2023, the Minneapolis-St. Paul MSA permitted 4.7 new housing units per 1,000 residents, placing its production sixth among the total of 12 peer MSAs. The Austin MSA permitted 15.4 new housing units per 1,000 residents, while the Chicago MSA permitted only 1.5 new housing units per 1,000 residents. In 2025, the Minneapolis-St. Paul MSA permitted 3.7 new housing units per 1,000 residents, placing its production seventh among all 12 peer MSAs. Production slipped for 10 of the 12 peer MSAs between 2023 and 2025.

The drop-off brings the yearly average of new housing units in the Minneapolis-St. Paul MSA to 16,918 for the period beginning in 2021, the first year after the release of the Itasca task force report, and ending in 2025. That means the market is not on track to meet the Itasca goal over the long run.

Affordable housing construction drops below the annual goal

All housing production supports affordability within a market. But many households will struggle to afford housing at the prices the market currently provides. Recognizing the importance of new affordable housing, the Regional Housing Affordability Dashboard highlights the affordable housing production goal set between local governments and the Metropolitan Council: by the end of the 2021–2030 decade, the seven-county Twin Cities region should have an additional 20,900 new affordable housing units, both publicly subsidized and not. That works out to 2,090 per year.

Affordable housing production was high in 2021, at 2,283 units, peaked in 2022 at 3,876 units, and then fell to a still-high total of 2,238 units in 2023. But it dropped to 1,760 units in 2024, marking the first time since 2017 that the Twin Cities region failed to produce more than 2,000 units of housing affordable to households earning 60 percent of the area median income (AMI). While less than half of the 2022 peak, 2024’s production remains historically high compared to trends before 2017.

As shown in the “Indicators” section of our Regional Housing Affordability Dashboard, there were notable differences across affordability levels within those overall 2024 production numbers. Declining production from 2023 to 2024 was driven entirely by a drop in the number of new units affordable to households earning 51–60 percent of AMI. Production of housing affordable to households earning 30 percent of AMI remained stable, and production of housing affordable to households earning 31–50 percent of AMI increased.

The strong affordable housing production from 2021 through 2023 means that even if the 1,760 units produced in 2024 were the new norm through 2030, the region would still come close to meeting the 20,900-unit goal.

Black homeownership rate backtracks

Joining a long-term regional effort, the Itasca task force identified the Black-White homeownership gap as a key indicator for the region’s housing market. In 2019, the year before the task force released its report, Black and White homeownership rates were 26.5 percent and 75.3 percent, respectively, leaving a gap of nearly 49 percentage points. If the region is going to continue to prosper economically, Itasca task force members argue, one of its fastest-growing demographic groups must have access to homeownership.

The region’s low Black homeownership rate isn’t tied to any particular characteristic of its Black population. (Our dashboard defines the Black population as those who respond to the U.S. Census Bureau that they are Black alone and excludes individuals who also report Latino ethnicity.) Black Minnesotans are younger, have lower incomes, and are more likely to be foreign-born than White Minnesotans, but a detailed analysis we conducted several years ago found that these differences didn’t fully explain the homeownership gap at the state level. At a more basic level, the State Demographic Center estimates that Black Minnesotans born in other countries own their homes at rates similar to those of Black Minnesotans born in the United States.

The goal outlined in the dashboard is for the region’s Black homeownership rate to rise to 45 percent—which was the national Black homeownership rate in 2020 and just below 2024’s national rate of 45.5 percent—by 2030. By 2023 the region’s rate had risen to 34.3 percent, but in 2024 the regional Black homeownership rate fell back to 29.1 percent, still slightly higher than the region’s pre-pandemic trend but below the trend shown in the previous three years of data. However, our findings may reflect some “noise” in the numbers. That is, because we calculate each of our estimates using one year of American Community Survey data from the U.S. Census Bureau, we see year-to-year changes that fall within the margin of error and may not precisely reflect real-world changes.

In 2024, among its group of 12 peer MSAs, the Minneapolis-St. Paul MSA had by far the largest gap between Black and White homeownership rates, at 46.9 percent. The next-highest MSA, Pittsburgh, was at 33.3 percent.

We also looked at Black homeownership rates using five-year American Community Survey data. While these data do not tell us how Black homeownership rates are changing year by year, they do provide a more precise understanding of longer-term trends. In this less noisy dataset, when we compared five-year data from 2010–2014 with the most recent five-year data from 2020–2024 , we found that the Minneapolis-St. Paul MSA had the largest increase in Black homeownership rate among the peer MSAs. (See Figure 2.)

Trends look bad for future affordability

Taken together, the indicators in our dashboard show that the Minneapolis-St. Paul MSA is still one of the more affordable options for housing among its group of 12 peer MSAs. As of March 2026, the region’s rent was the fourth-lowest. The Minneapolis-St. Paul MSA had the second-highest share of rental units affordable to households earning 50 percent of AMI, lagging behind only the Pittsburgh MSA, and the fourth-highest share of rental units affordable to households earning 30 percent of AMI as of the most recent data through 2022. (For the Minneapolis-St. Paul MSA, 50 percent of AMI in 2022 was $58,650 for a family of four and 30 percent of AMI was $35,200; for the Pittsburgh MSA, the incomes were $47,400 and $28,450, respectively.)

At the same time, the Minneapolis-St. Paul MSA’s rent-to-median-household-income ratio was just above the median among the 12 regions. Lower rents in the Minneapolis-St. Paul MSA thus reflect relatively lower median household incomes to some degree.

Similar to trends shown in previous updates to our dashboard, the Minneapolis-St. Paul MSA has the second-lowest share of households experiencing housing cost burden—that is, spending more than 30 percent of their income on housing costs—at 29.2 percent, above only that of the Pittsburgh MSA. The overall homeownership rate in the Minneapolis-St. Paul MSA hit 69.9 percent in 2024, second only to the 70.5 percent of the Pittsburgh MSA.

Despite this relative affordability, warning signs—beyond the failure to meet the Itasca task force’s three goals—are flashing.

For example, our dashboard shows that the Minneapolis-St. Paul MSA’s rental vacancy rate at 5.4 percent is the third-lowest among its peers. The fewer vacant units available, the more likely prices are to rise. Multifamily property managers tell us that rent growth in recent years has not kept pace with their costs of doing business. Absent a change, it’s likely that something will eventually give—and early 2025 data show that asking rents in the Minneapolis-St. Paul MSA outpaced income growth, diverging from national trends.

Growth or declines in housing construction don’t happen in a vacuum. Many factors are beyond the sway of ordinance or statute. But there are many ways community leaders can support affordability in their region, including by reviewing regulations that might impede affordable housing development. For example, some housing regulations may increase production costs without yielding public benefits. Others may limit the adoption of potentially cost-saving construction techniques.

Continuing to monitor housing affordability in the Twin Cities region

The Minneapolis Fed will continue to update the Regional Housing Affordability Dashboard. By providing data broken down by race and income and enabling users to adjust the display of indicators across time and geography, we hope to inform anyone interested in supporting housing affordability in the largest metropolitan area in our region.

Endnote

* The seven counties are Anoka, Carver, Dakota, Hennepin, Ramsey, Scott, and Washington.