Housing construction in the Twin Cities metro is getting off to a slightly slower start than last year.
During January, builders were issued 424 permits to build 919 units. That was a 7 percent decline in permits and a 16 percent decline in total units, said data compiled by the Keystone Report for Housing First Minnesota and the Builders Association of the Twin Cities.
“While the numbers … are down slightly from last year, we remain optimistic,” said Tom Wiener, the incoming president of Housing First Minnesota. “With the supply shortage we have in the existing market, we expect 2018 to be a great year for new construction.”
Those permit figures include single-family houses and multifamily housing, mostly market-rate apartments. (A single permit can be issued to build more than one unit.) Both categories showed a slight decline compared with the same four-week period last year. As they have for the past several years, apartment developers outpaced homebuilders.
During January, builders were issued enough permits to build 517 multifamily units, 22 percent fewer than last year, and 402 permits to build single-family houses, down 6 percent. Though the combined permit totals were down slightly compared with last year, it was one the strongest January figures in more a decade and comes after a particularly strong end to 2017. December 2017 saw nearly 100 more units get permits.
Current data suggest that demand for new housing in the Twin Cities will only deepen this year, and builders and developers are mostly optimistic. There’s a dearth of house listings in the Twin Cities metro and that’s putting pressure on homebuilders to increase production, particularly for houses that are affordable to entry-level and first-time buyers.
And though there’s deepening concern about a possible oversupply of luxury rental apartments in certain submarkets of the Twin Cities, there’s pent-up demand for relatively affordable rental housing in the second- and third-ring suburbs.
Homebuilders, however, are facing a handful of construction-related challenges that show no signs of relenting in the coming year.
“With the ever-strengthening economy, all signs point to continued residential construction growth this year,” said David Siegel, executive director of Housing First Minnesota, a program of the Builders Association. “There are several factors that have the potential to hold back the amount of growth we see including the tightening labor force and the high cost of land, materials and regulation.”
When it comes to the total number of permits, Woodbury took the top spot with 37 permits, followed by Lakeville with 32 and Lake Elmo and Victoria, which each had 19.
These are the biggest projects permitted during the month:
• Benson-Orth General Contractors is building an 111-unit project in Minneapolis.
• Opus was issued a permit for a 148-unit development in Minnetonka.
• Schuett Cos. of Golden Valley is planning a 102-unit project in Golden Valley.