Homebuilders in the Twin Cities are on pace to have their busiest year in more than a decade after a particularly strong September.

Last month builders were issued 472 single-family permits, 6% more than last year, according to Housing First Minnesota, a trade group that represents more than 1,100 builders, remodelers, developers and suppliers throughout the state.

"It's shaping up to be a good year for homebuilding activity," John Rask, president of Housing First Minnesota, said in a statement.

Apartment construction has been robust, as well. During the month, builders pulled 26 permits for 1,009 multifamily units, a 21% increase over September 2018. Most of those units, which represented nearly 70% of all of the planned construction during the month, were market-rate rental apartments.

Home buyers in the Twin Cities, especially entry-level buyers and downsizing baby boomers, are shopping in a highly competitive market with demand for the least-expensive listings outpacing supply.

At the end of August, for example, there were 9% fewer previously owned houses on the market than last year at the same time, according to Minneapolis Area Realtors.

That shortage of existing listings is forcing many buyers to consider new construction, which is far more available for those who can afford it. During August there were 8% more new houses on the market than last year at the same time. Most of those new houses are affordable only to move-up buyers who are looking to purchase a bigger or more expensive home.

The data, which is compiled by the Keystone Report for Housing First Minnesota, show that so far this year builders planned to construct 11,254 units, exceeding last year by more than 2,000 more units.

"Our housing market is still vastly undersupplied and the pace of homebuilding this year will help, but more production is needed in order to make a dent in our supply shortage," Rask said.

So far this year Minneapolis has been the busiest city for builders, who received permits to construct 3,637 units, mostly multifamily housing. Minnetonka was No. 2 with 760 units, followed by Lakeville with 649.

Increases in demand for new housing in the Twin Cities has tracked closely with the rest of the nation. As of August, new-home sales across the country increased 6.4% compared with a year ago, according to the U.S. Census Bureau.

Those national figures show gradual declines in the number of new homes for sale, suggesting price increases in the future. As of August, there were 328,000 homes for sale. At the current sales pace those listings would last 5.7 months.

David Siegel, executive director of Housing First Minnesota, said that while the slow and steady increase in new-home construction so far this year is promising, it is not enough to meet demand.

"We need to be building homes at all price points in order to truly solve our housing issues in the Twin Cities," he said. "And unfortunately delivering units at the most affordable price points is only growing more difficult in our region."

Jim Buchta • 612-673-7376