Housing construction in the Twin Cities metro during July increased for the second month in a row, according to a monthly report from the trade group Housing First Minnesota.

Last month, cities issued homebuilders 528 permits to build 919 units. That included 513 single-family homes, 12% more than last year at the same time. Although apartment construction last month was twice as busy as the same month last year, with 406 mostly upscale apartments permitted, July was the second-slowest month so far this year for multifamily.

"With the economy steaming ahead and interest rates dropping, home buyers are showing continued interest in building new homes," John Rask, president of Housing First Minnesota, said in a statement. "As prices of existing homes continue to climb and inventory remains tight, we expect this trend to continue."

Apartment construction has outpaced single-family houses for most of the past several years, but in recent months multifamily development has slowed slightly.

The biggest multifamily projects permitted during the month were a 218-unit project in Minneapolis by Opus Design Build and a 93-unit project by Reuter Walton Commercial.

The back-to-back gains in single-family home construction come after several months of steady declines caused, some say, by less-than-ideal weather and rising costs of land, labor and materials. But permitting can be volatile from month to month, so the industry is still only cautiously optimistic the upward trend will continue.

Homebuilding in the Twin Cities has been surprisingly restrained given the shortage of house listings in the Twin Cities, especially those affordable to first-time buyers. At the current sales pace there are only enough houses priced at less than $250,000 to last a little more than a month. The market is considered at equilibrium with a healthy balance between buyers and sellers when there's a four- to five-month supply of listings.

But with the median sale price reaching an all-time high of $290,000 and the shortage of existing entry-level houses deepening, many buyers are visiting their local homebuilders.

During June, buyers signed 4,091 purchase agreements to buy new single-family houses, according to the Minneapolis Area Realtors (MAR). That was 5% more than last year at that time and only includes properties listed through the Regional Multiple Listing Service. Purchase agreements to buy townhouses, which tend to cost far less than single-family houses, were down by 5% during the month.

The shortage of existing house listings is being blamed for an 8% decline in all home sales across the metro during June, according to MAR.

Home buyers — and builders — are getting an assist in recent weeks from falling mortgage rates, attracting noncommittal buyers.

On Thursday, Freddie Mac said the 30-year fixed-rate mortgage was at 3.75%, unchanged from the previous week and nearly a full percentage point lower than last year at this time. Sam Khater, Freddie Mac's chief economist, said in a statement he expects favorable rates to bolster demand into the late summer and early fall.

"Home prices hit another all-time high last month," said David Siegel, executive director of Housing First Minnesota, in a statement. "The only way to bring down the price of all homes is to build more. Unfortunately until [builders] get some relief on the regulation and fee side of homebuilding, we will not be able to help ease our region's ever-growing home prices."