With the housing recovery in full swing, Twin Cities homebuilders had their best February in nearly a decade.
Throughout the 13-county metro area, builders were issued 288 permits to build 313 units, the Builders Association of the Twin Cities said Thursday. That was a 36 percent decline in the number of planned units from last year, but a 61 percent increase in permits.
The year-over-year decrease is the result of a lull in apartment construction, which represented only 10 percent of all units during the month. For much of the past year nearly half all planned units were apartments and other kinds of multifamily development. Last month, single-family houses picked up the slack. The number of single-family houses planned for the metro was up 62 percent compared with last year.
“All the signs continue to point to a strengthening housing market,” said Pamela Belz, president of the Builders Association of the Twin Cities and a developer with Senior Housing Partners.
The construction industry is in the midst of a dramatic turnaround that has been led by apartment construction. While construction is still a fraction of what it was at the peak of the market, low mortgage interest rates and rising consumer confidence have helped stimulate single-family home sales in recent months. The industry is also getting a boost from tight inventory of existing homes for sale, which is forcing many would-be home buyers to visit their local builder.
Earlier this week, the U.S. Commerce Department said sales of new single-family houses across the country had increased 16 percent compared with the previous month, pushing sales to their highest level since mid-2008.
Belz said that while builders are still cautious, there’s been a distinct change in attitudes: “The mood is definitely upbeat and with a little more enthusiasm than the last few years.”
Indeed, builder confidence across the country has remained relatively strong. The National Association of Home Builders said its measure of builder confidence during the month dipped only 1 percentage point, but was still at a six-year high.
NAHB Chairman Rick Judson, a builder from Charlotte, N.C., attributed the decline to rising costs for building materials and limited availability of labor and lots.
So far this year, permit activity in the Twin Cities metro area has nearly doubled compared with last year, with Minneapolis still leading the market. In just two months, permits were issued to build 382 units. Woodbury and Maple Grove have been the most active communities for single-family construction.
Tom Budzynski of TJB Homes in Blaine said that after selling six houses during the last month, he expects sales to easily outpace the previous year. “We are currently working with eight more buyers who will probably buy within the next four weeks,” he said.
Sharry Schmid, a managing broker for Edina Realty and head of the company’s Builder Resource Group, said the data are consistent with what she’s seeing in the market.
“I think this trend will continue and very likely the percent of increase will go even higher.”