Standard & Poor's/Case-Shiller home price index of 20 cities saw the steepest decline in the index's two decade history.
U.S. home prices fell nearly 11 percent. Twin Cities home prices dropped 10 percent, putting the metro area in the middle of the pack of the twenty cities studied.
The price declines are part of an overall housing slump, triggered by the collapse of the subprime mortgage market. Many home owners went into foreclosure, driving up the number of homes on the market.
But housing industry experts said that it's good prices are going down now, because that will move properties off the market.
Christopher Galler, Chief Operating Officer for the Minnesota Association of Realtors, said the declines in home prices go hand in hand with increased home sales.
Minnesota home sales ticked up about 2 percent between January and February.
"What we're seeing is housing activities, the number of transactions is increasing over January numbers, and we're seeing prices fall back in line with the income of ordinary purchasers," said Galler. "And we need to see those two things in order for the market to stabilize so that we can continue to move forward."
Deb Greene, a realtor with Coldwell Banker Burnett, said she's seeing some signs of the housing market improving. She's one of the forces helping to push prices down. She's encouraging sellers to price their homes to move, among other things.
"We've consistently tried to adjust the price accordingly. If it hasn't sold, then we're talking early on in the game about actually reducing the price or correcting issues that might have come up during showing. If there's an issue with a room that needs painting, we're asking the sellers to go ahead and get that done," Greene said.
But Greene said it's hard to get a house to sell when there's a foreclosed property sitting on the same block. So she's glad to see banks that own those foreclosed properties start to relent on their pricing.
"Banks aren't in a good position to hold real estate for a long time. They're typically motivated sellers," said Rick Wall, Chief Executive Officer of Highland Bank, which has eight branches in the Twin Cities area.
Wall declined to say how many foreclosed properties his bank currently has on its books. But he said his institution is working hard to move its properties and will sometimes waive or reduce closing costs to make that happen.
"That's certainly something that would be on the table. Like anybody, as a buyer, you're looking at it as a package, and as a seller, you're doing the same. For an acceptable price, closing terms can be improved; sometimes you don't change closing terms but you get a different price," Wall explained.
Christopher Galler of the Minnesota Association of Realtors says banks dropping the price of foreclosed properties may contribute to the overall decrease in home prices, but he hesitated to call it the single most important factor.
"We still just have a lot of regular sellers, who want to move their property," Galler said.
Experts caution that one month of increased home sales may be a blip in a continuing downward trend. But Galler thinks the housing market has hit bottom and that improvements will continue with low prices fueling greater sales.
That could be a big help to parts of the Minnesota economy, like new home construction, which has been stalled by the housing slump.
But economist Ed Lotterman warns that as housing prices stay low, that could affect the economy in other, more negative ways.
"Most people when they hear of a decline like this, they flinch and think, 'gosh, the most important thing we own isn't worth as much as it was a year ago, we're not as wealthy as we thought we were in our spending, and that slows the economy in general'," said Lotterman.
Still, Lotterman said home prices had previously been too high, so it's important to let them drop for the market to rebalance.