Falling mortgage rates and rising prices are luring new-home buyers off the fence.

During June, cities issued homebuilders 711 permits to build 1,480 units in the metro, according to Housing First Minnesota. That included 677 single-family houses, 21% more than last year.

The increase in single-family permits marked the end of a four-month construction swoon. The declines were driven by unseasonable weather, and a shortage of new houses affordable to first-time buyers and downsizing baby boomers.

Ian Peterson, division president for Florida-based David Weekley Homes, said many would-be home buyers are now feeling motivated by better weather, lower borrowing costs and the threat of home prices rising even higher if they delay their purchase.

"Interest rates are down, which has helped," he said. "However, some buyers are still uncertain."

Upper-bracket buyers are the most cautious these days, said Peterson, but with a shortage of inexpensive used houses on the market, buyers willing to spend less than $500,000 are driving sales.

"The market has shifted dramatically to lower price points," he said. "Therefore we have designed all new single-family product for the lower price points."

To cater to those more budget-conscious buyers Peterson's company is developing Brayburn Trails in Dayton, a third-ring suburb about 45 minutes from downtown Minneapolis. Prices in the first phase of that 154-acre project will start in the low $400,000s, but by fall the company will launch an even less-expensive phase with prices starting at about $375,000.

After a particularly slow start to the year, Peterson saw a double-digit increase in sales during April and May, causing his company and others to increase the number of permits they pulled this month.

Rentals have outpaced for-sale housing for much of the year. That was the case again this month when developers were issued permits to build 803 multifamily units, 60% more than last year. That included a 175-unit apartment building by Reuter Walton in Minneapolis, the busiest city for housing construction, and 160 units in Lakeville by Stonebridge Construction. Lakeville was the third busiest city so far this year behind Minnetonka and Minneapolis.

On Thursday Freddie Mac said the 30-year fixed-rate mortgage rate fell for the seventh time in the last nine weeks, and to the lowest level since November 2016.

The 30-year fixed-rate mortgage averaged 3.73% with an average 0.5 point for the week ending June 27, down slightly from the previous week and nearly a full percentage point lower than a year ago.

Those declines are expected to boost home sales during the remainder of the year. In the Twin Cities and beyond sales of new and existing homes have been particularly volatile, but barely keeping pace with last year.

Also on Thursday, the National Association of Realtors reported that pending home sales across the country during May increased slightly from the previous month, but were down 0.7% compared with last year.

In the Twin Cities metro, existing home sales have struggled to best 2018. During May, for example, pending sales of existing homes were flat compared with the same time last year, according to the Minneapolis Area Realtors. Closings, which reflect deals signed two to three months ago, broke a several-month losing streak by increasing 3% over year ago levels.

"There is serious demand for single-family housing in the Twin Cities," John Rask, president of Housing First Minnesota, said in a statement. "The strong permit numbers we are seeing this month is what we expected to see all year."