State prosecutors in the Saxon capital told journalists that the man has been arrested on suspicion of manslaughter.
Bild reported earlier that the flatmate, a 26-year-old fellow Eritrean, had confessed while being interrogated by investigators.
The body of 20-year-old victim Khaled Idris Bahray was found on January 13th in the courtyard of an apartment building where he lived with seven other African refugees.
The police had originally said that there was no evidence of foul play in his death, before an autopsy showed that he had died of knife wounds in his throat and chest.
Some had criticized the police for not immediately suspecting a xenophobic attack, and anti-racism demonstrations were held at the site where the body was found.