Momentum continues to build for single-family housing starts in the Twin Cities as April brought another big jump in local building activity. But the slump for apartment construction continues.
During the past month, cities in the 13-county metro area permitted 656 new housing units overall (up 5% from April 2023), including 541 new single-family homes (up 40%) and 115 new multifamily units (down 51%), according to the Keystone Report, which tracks permits in the 13-county metro area. The combined value of the permits is $208.9 million (up 28%).
Total housing starts for the year now stand at 2,565 new units (down 12.5%), including 1,767 single-family houses (up 41%) and 798 multifamily dwellings (down 52%).
The April 2024 single-family numbers look good in part because April 2023 was a slow month for homebuilding. Put another way, the 541 new homes permitted are well below the totals from April 2022 (750) and April 2021 (762), according to Keystone data. This year’s total is slightly below the month’s five-year average between 2019 and 2023 (581).
But strong demand for housing continues to drive construction even in a less-than-ideal interest rate environment, according to Housing First Minnesota.
“Our market continues to be impacted by high interest rates,” Art Pratt, 2024 board chair of Housing First Minnesota, said in a statement. “However, with our region severely short of homes, there's a strong resilience within the industry. Builders are not just problem solvers; they're innovators, constantly seeking new ways to meet the ever-evolving demands of the market.”
James Vagle, chief executive officer of Housing First Minnesota, said in an interview that April was “another solid month with a 40% increase in single-family permits, which puts us at our five-year average.”
“We are happy about that, but we remain concerned about our overall housing supply challenges. So even with the strength in single-family throughout the first quarter of 2024, we need to build a lot more homes in Minnesota. Homes of all types,” Vagle added.
That includes apartment construction, which was slow across the board in April. Among projects with 16 or fewer units, metro area cities issued 11 permits for a combined 47 units in April, according to Keystone. Among those with 60 or more units, only one project was permitted.
Cecil Smith, president and CEO of the Minnesota Multi Housing Association, said the interest rate environment is especially challenging for multifamily developers. Unlike single-family homebuyers, he said, “only a very few people in our industry can be cash buyers.”
“I think on the permitting, we’re just still seeing the ongoing effects of interest rates. And I think what's even more concerning is, we're starting to see the possibility that the Fed will not lower rates until next year,” Smith said in an interview.
Top metro area cities for permits in April include Plymouth (75 planned units), Rosemount (67), Rogers (54), and Lakeville (43), according to Keystone. Outside the metro, Rochester permitted 110 new housing units.
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