Slow sales and a lull in apartment construction caused a significant decline in homebuilding this month in the Twin Cities metro area.

Homebuilders were issued 413 permits in August to build 532 units, a 50 percent decline in planned units compared with last year, according to data compiled by the Keystone Report for the Builders Association of the Twin Cities (BATC).

While the declines are dramatic, construction activity has been volatile from month to month depending on how many apartment buildings have been permitted. In addition, new home sales have softened slightly in some areas. Some blame a lack of options, while others say that workers aren't earning enough to afford a new home.

"While there are signs of broader improvement in the economy, locally, underemployment and resultant lower wages keep buyers hesitant," said Shawn Nelson, this year's president of the BATC and president of New Spaces, a home renovation firm in Burnsville.

"It's clear that multifamily construction has kept overall permit numbers somewhat volatile this year," Nelson said.

Apartment construction has dominated the recovery in the metro area and, for much of this year, they represented about half of all new residential units built in the Twin Cities. In August, however, apartments represented just a quarter of all units.

New home sales have been down, as well. Last month the National Association of Home Builders said that new home sales across the country fell 2.4 percent compared with last year.

Builders seem to be taking it in stride. The latest housing market index from the National Association of Home Builders rose from 53 to 55 in August, the highest level in seven months, suggesting an increase in homebuilder confidence despite declines in permits and sales. That report also showed an increase in foot traffic to sales centers and models.

Despite a disappointing August, homebuilders in the Twin Cities are holding their own compared with last year. During the first eight months of the year, 3,213 permits have been issued to build 6,117 units, just 0.5 percent more than at the same time last year. The number of single-family houses was down nearly 7 percent compared with last year.

All year, builders have been most active in Minneapolis, which is in the midst of an apartment boom. In August, for example, the city was the busiest in the metro with 83 units. Maple Grove was second with 40 units, followed by Blaine at 32 and Woodbury at 26. Lakeville was No. 5 with 21 units.