On the cusp of a new year — and winter — Twin Cities housing construction posted stellar late-season gains.
During November, 611 permits were issued to build 1,892 units, according to data compiled by the Keystone Report for Housing First Minnesota. Those figures included enough permits to build 1,306 multifamily units, a 102% annual increase and the most in a single month so far this year.
Homebuilders also saw unusually strong gains, issued 586 permits for single-family houses, a 30% increase over last year.
“Consumer confidence is at an all-time high, and production should continue to grow as we look ahead to 2018,” said Bob Michels, president of Housing First Minnesota and a Twin Cities area homebuilder.
Housing construction in the Twin Cities has been bolstered by shifting demographics, solid buying conditions and a shortage of existing houses. Entry-level buyers are increasingly getting into the market, bolstering demand for affordable houses, according to Nick George, a sales agent with Keller Williams and a new construction specialist.
“Everyone loves the idea of having a brand-new home,” he said, noting that demand has been especially strong in several eastern suburbs.
“Woodbury is a hotbed for new construction right now,” he said.
During November, Lake Elmo issued the most permits, with 48, followed by 41 in Lakeville and 29 in Woodbury, according to Housing First Minnesota, which is a program of the Builders Association of the Twin Cities.
So far this year there were enough permits issued to build 6,940 multifamily units, nearly twice as many as the year before. And there have been 5,481 single-family permits, a 14% increase over last year.
In the Twin Cities, gains in apartment permits last month were driven by several large suburban projects including 354 units in Golden Valley, 322 units in Minnetonka and a 183-unit project in Eagan.
Construction gains in the Twin Cities come after a lackluster October for local builders.
The national trend has been promising, as well. From September to October, sales of new single-family houses in the U.S. increased 6.2% to a seasonally adjusted annual rate of 685,000, according to the latest data from the Department of Housing and Urban Development and the U.S. Census Bureau.
That was up 18.7% compared with October 2016 — the strongest year-over-year growth since the first quarter of 2017, and all four regions of the country saw gains.
Though the industry is having its best year in more than a decade, David Siegel, executive director of Housing First Minnesota, lamented the high cost of land and labor. He said that a decade ago, 72% of the homes built in the Twin Cities were below $325,000 compared with 38 percent today.
“Much of this can be attributed to our high land costs and regulatory pressures,” he said in a statement. “We have a housing shortage, but with the high regulatory costs in Minnesota builders are unable to build at the entry-level price, a key piece of the housing market.
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