Homebuilders in the Twin Cities had their busiest November in at least 15 years, according to a monthly report from Housing First Minnesota, which tracks permits to build single-family houses and rental apartments in the Twin Cities.
The group said that 680 permits were issued to build 1,336 units during four comparable weeks in the month of November. A single permit can be issued to build more than one unit.
Housing construction in the Twin Cities this year is outpacing 2018 with apartments leading the way to what is likely to be a record year for multifamily units. Production of single-family homes is catching up quickly, especially during the last half of the year.
“Our housing market is in desperate need of new single-family inventory,” said John Rask, president of Housing First Minnesota, in a statement. “This end-of-the-year surge is much needed and is a great step in the right direction to balancing out our housing market.”
For several months in a row permits to build free-standing for-sale housing have topped previous years, sending builders into the new year with plenty on the to-do list. Builders were issued permits to build 645 single-family homes, 45% more than last year at the same time.
Apartment construction eased slightly with the number of planned multifamily projects totaling 691 units, down 12% from last year. The largest multifamily projects permitted this month were in Minnetonka, where Doran Construction is building a 175-unit project. In Vadnais Heights, Benson-Orth was issued two permits to build 140 units. And in Lakeville, Horizon Construction was issued three permits to build 60 units.
On Tuesday, the U.S. Commerce Department said that sales of new homes nationwide dipped slightly from September to October, but increased by nearly a third compared with a year ago. New home sales, which aren’t tracked by Housing First, increased 4.2% in the Midwest and 7.1% in the West, but were down in the Northeast and South.
The Commerce Department said the median price of a new home sold during October was $316,700, a 3.7% annual increase.
That increase is being driven by low mortgage rates, which have trended lower in recent months and remain below 4%.
Gains in construction come despite rising costs, which are partly to blame for higher prices. To compensate for those higher costs, builders are focusing on smaller houses and attached townhouses.
“The greatest demand in our housing market is for single-family homes at entry-level prices,” said David Siegel, executive director of Housing First Minnesota, which was formerly known as the Builders Association of the Twin Cities and represents more than 1,100 builders, remodelers and others throughout the state.
“Builders are working to meet this demand, but unfortunately building even townhouses at that price point is becoming increasingly difficult. While this surge in new housing inventory will help our interconnected market, it will do little to help our entry-level home buyers who are facing great barriers to homeownership.”