Twin Cities homebuilders are having their very best summer in at least a decade.
During June, 571 permits have been issued to build 610 houses and apartments throughout the 13-county metro area, according to data compiled by the Keystone Report for the Builders Association of the Twin Cities.
Of those permits, 557 were for single-family homes, a 24 percent increase and the biggest number in recent memory.
“We’re definitely starting to see the low inventory of existing single-family housing impact new construction,” said Meg Jaeger, president of the builders association.
The industry is getting a boost from persistently low mortgage rates and a shortage of house listings that’s prompting buyers who can’t find a suitable existing home to build instead. And the report provides more evidence that homebuilders, who had a slow comeback from the 2008-09 recession, are now finally catching up to the apartment developers who led the housing recovery.
With about 11,000 new apartments having been built over the past three years in the metro, according to Marquette Advisors, supply and demand for rental apartments has moved closer into balance. Multifamily permits, which are often volatile from month to month, plummeted in June and represented only 8 percent of all planned units. (A single permit can be issued to build more than one unit.)
All of the 14 multifamily permits issued during the month were for projects with fewer than 16 units.
Most of them were likely suburban townhouses, which are gaining favor with entry-level buyers and empty nesters.
Mortgage rates are at a three-year low and global economic uncertainty is expected to keep increases at bay for awhile. For the week ending June 28, the average rate for a conforming 30-year fixed-rate mortgage was 3.61 percent.
Many home buyers, however, have been stymied in their attempts to take advantage of those rates. Buyers have outpaced sellers in much of the Twin Cities metro area, creating a shortage of listings. During April, for example, there weren’t enough listings on the market to last even three months, prompting many frustrated buyers to visit a homebuilder to see what options are available.
Homebuilders are now working overtime to find inexpensive sites where they can construct houses to meet the demand for entry-level houses, which in many areas start at $300,000. Demand has been especially strong in the first- and second-ring suburbs.
Lakeville, for example, issued the most permitted units (56) followed by Plymouth (40) and Blaine (34).
Woodbury and Apple Valley each issued 29 permitted units.