Home building in the Twin Cities last month was down slightly compared with last year, but with apartment development on the upswing the industry is on track to outpace 2020.

During September, builders were issued 564 permits for single-family homes, 13% fewer than last year, according todata compiled by the Keystone Report for Housing First Minnesota. For multi-family construction, mostly rental apartments, enough permits were issued to build 1,152 units, which was more than double last year and the highest since January.

"Homebuyer activity is still high, but it's slowed from the fervent pace that we saw this time last year,"saidToddPolifka,2021president of Housing First Minnesota, the state's largest trade group for home builders.

The report comes as home builders wrap up the Fall Parade of Homes on Oct. 3, their biggest marketing event of the year. Polifka, who has three houses on the tour, said it was one of the busiest fall tours in recent years. While there were plenty of tire-kickers and Parade groupies, many of the attendees were serious buyers, he said.

Last month was the second month in a row of declines with single-family permits, but construction remains above historical averages in part because of strong demand earlier this year.

So far this year, 10,908 units have been authorized, about 1,000 more than the previous year. Multi-family construction represents about half of all those units, a drop from last month when it accounted for about 70%.

Home building in the Twin Cities is always seasonal, with sales peaking in late spring and slowing in late fall as the temperatures drop and kids go back to school. That was the case last year.

During the second half of 2020, demand for new houses in the Twin Cities was off-the-charts strong in part because the pandemic pushed the spring buying season back a few months. The pandemic also goosed demand for larger, more-expensive houses in the suburbs as families started spending more time working and studying together.

"The higher end of market is extremely strong and that hasn't slowed one beat," Polifka said. "The lower end has been impacted most. As price goes, you're taking more people out of the market."

For fans of new houses, the buying spree has continued this year. Many builders say demand for new houses outstrips their ability to build them because of a shortage of land, labor and certain building materials. Some builders have put limits on how many houses they'll sell each month in part because the volatility in material costs has made it difficult to price a home that won't get built for several months.

"Margins are down so many builders have to limit sales until the cost and pricing structure can catch up," said Polifka.

For the month, Woodbury issued the most permits (55) followed by Lakeville, Rosemount Blaine, which all issued 36 permits.