New Home Construction Plummets, ‘We Continue to Grow Concerned’
New home construction has slowed significantly in the Twin Cities according to a new report, drawing concerns from a trade group representing homebuilders.
Data compiled by local research firm Keystone Report show the number of permits for new single and multifamily homes fell 28 percent in August compared to the year prior. According to the report, 364 permits were pulled last month, down from 507 a year earlier.
Compared to several years earlier, the percentage drop is more stark. Permits fell 46 percent compared to August 2018, when 680 permits were pulled.
“We continue to grow concerned about how the current slowdown in homebuilding will impact our overall long-term market,” said James Vagle, CEO of Housing First Minnesota, the state’s homebuilders trade group.
It’s a sharp turn from this spring when Twin Cities home builders saw a record April for residential construction permits.
“The demographics remain the same: we have a large population in their peak homebuying age and a shortage of homes in our region,” said Vagle. “It’s more important than ever that lawmakers and leaders look at innovative ways to bring starter homes back in Minnesota.”
Of local cities in the CCX News viewing area, Plymouth was listed at No. 4 for permits pulled with 19, trailing only Elk River with 29, Woodbury with 32 and Lakeville, which took the top spot with 37.
A recent report released by Minneapolis Area Realtors also shows a drop in home sales, which is attributed to rising mortgage rates and home prices.
“High interest rates and rising home prices continue to force many homebuyers to press pause on their plans to purchase a new home,” said James Julkowski, board chair of Housing First Minnesota.
Julkowski did point to potential buying opportunities as inventory has grown slightly.
“A bright spot, as the market comes down from the competitive high we saw for the past two years with the historically low inventory of homes for sale, is that many homebuyers will find opportunities in this market,” he said.