September Single-Family Building Permits Highest Since 2005

September Single-Family Building Permits Highest Since 2005

Low interest rates, pent-up demand driving market

The pandemic economy remains a mixed bag, but in September the Twin Cities saw a housing boomlet. Housing First Minnesota released new statistics showing that 650 single-family home building permits were pulled last month, up a robust 38 percent compared to September 2019.

Numbers from Housing First rank September as the busiest month so far this year for building permits being pulled. It’s also the highest number of permits pulled in September since 2005, when the U.S. was in the midst of a big housing boom.

“As inventory of existing homes for sale continues to drop, we’re seeing increased interest from homebuyers looking to build,” said Gary Kraemer, president of Housing First Minnesota, in a statement. “On top of the pent-up demand, many buyers are now looking for more space to work remotely and are willing to look further into the suburbs as they may no longer have a commute to consider.”

The Twin Cities is not alone: Single-family home construction is up across the U.S.

Based on preliminary number for August, the latest statistics from the U.S. Census Bureau showed that single-family construction building permits were up 15.6 percent compared to August 2019. The uptick in the Midwest was the strongest region with single-family permits up 22.3 percent compared to a year ago.

But at the same time the federal numbers showed a steep decline for apartment construction. Permits for multifamily projects with five units or more were down 28.5 percent compared to a year ago.

The flipside of the building boomlet is that more affordable homes are in short supply. The latest statistics from the Minneapolis Area Realtors showed a median sales prices of $319,000 for single-family homes in August. That was uptick of 6.9 percent compared to a year ago.

The median sales price in August for newly constructed homes was significantly higher at $428,642.

“While we are pleased to see homebuilding activity continue to lead the economic recovery, we remain deeply concerned about the challenge of housing affordability,” said David Siegel, executive director of Housing First Minnesota, in a statement. “Following more than a decade of underbuilding, our housing market is extremely undersupplied. This is causing existing home prices to continue their steep climb.”