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New housing construction in the Twin Cities metro hit an eight-year low in 2023 dipping from its peak in 2021.

A total of 5,692 permits were issued for 10,638 units in 2023, down from 5,835 permits in 2022, according to an end-of-year report by Housing First Minnesota. That came after a whopping 7,811 permits in 2021.

Looking at permits pulled over the last ten years, however, the decrease in permits shows a trend back to numbers seen in 2016 when 5,345 permits were pulled.

Home-building trends this year were largely driven by interest rates, Housing First Minnesota’s 2023 board chair John Quinlivan said in the report. “Yet, buyer demand remains high, and conditions in the existing market continue to steer more buyers to purchasing newly built homes,” he said.

Notably, December saw a marked rise in construction. Metro builders pulled permits for 401 single-family homes, a 51% increase from the same time last year. In the same month, multi-family permits were pulled for 214 units, down 59% from the year prior.

“As interest rates begin to come down from their two-decade high, we may see a pick up in buyer activity,” CEO of Housing First Minnesota James Vagle said in the report. “However, Minnesota’s housing market is severely lacking inventory. The time to modernize our state’s zoning practices and allow for homes of all price points to be built is now.”

See total housing permits pulled over the last ten years: