MINNEAPOLIS — Minnesota has landed near the bottom of a new national ranking on affordable housing, underscoring the state’s ongoing challenges in providing attainable homes for working- and middle-class families.
According to the latest analysis from Construction Coverage, which examined U.S. Census Bureau and Zillow data, Minnesota ranked 7th worst in the nation for housing affordability. The study highlights the impact of soaring home prices, high construction costs, and declining residential building activity across the United States.
The average construction value for a new housing unit in Minnesota reached $303,993, far above the national average of $260,229. The state authorized more than 20,900 new housing units in the latest reporting period, with a total construction value exceeding $6.3 billion. The median home price in Minnesota now stands at $351,542, compared to the U.S. median of $369,147.
Notably, Minnesota saw 35.8% of its new units built as multi-family housing, slightly higher than the national average of 33.6%. While this suggests some progress in adding density and affordability options, overall costs remain a major barrier.
Nationally, affordability has eroded sharply over the past decade. As of early 2025, buyers earning around $75,000 annually could afford just 21% of listings, compared to more than 50% before the pandemic, according to the National Association of Realtors.
“Many point to immigration policies impacting construction sites, tariffs causing a rise in construction costs and overall economic uncertainty, which makes companies feel less confident in making investments,” the Design Build Institute of America said in reaction to August’s national jobs data.
The national median sale price hit nearly $374,000 in June 2025, more than double the post-recession low in 2012. At the same time, residential construction spending fell 8.5% year-over-year, weighed down by high interest rates, rising labor and materials costs, and cautious developers.
While Minnesota struggles with costs, some states are managing to build more affordably. Delaware ($146,106) and New Jersey ($170,086) reported the lowest average construction values per unit in 2024. Among large metropolitan areas, Omaha, NE ($172,691); Richmond, VA ($180,794); and New York, NY ($182,378) had the lowest average costs for new housing.
By contrast, coastal cities such as Miami, San Francisco, Portland, and Boston are seeing the highest construction costs per unit, reflecting both expensive building markets and a focus on higher-end housing.
For policymakers and housing advocates in Minnesota, the ranking adds urgency to calls for increased investment in affordable housing supply. Without stronger incentives for affordable construction, middle-income families may continue to be priced out.
The study emphasizes that unless significant steps are taken to expand starter home supply, ease construction costs, and address financing hurdles, affordability will remain out of reach for many Minnesotans.
Originally reported by Southern Minn.
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