New home construction plummets, ‘we continue to worry’

5:10 p.m. | Tuesday, September 6, 2022

Construction of new homes has slowed significantly in the Twin Cities according to a new report, raising concerns from a trade group representing homebuilders.

Data compiled by local research firm Keystone Report shows the number of permits for new single-family and multi-family homes fell 28% in August from a year earlier. According to the report, 364 permits were withdrawn last month, up from 507 a year earlier.

Compared to several years earlier, the percentage decline is more pronounced. Permits fell 46% from August 2018, when 680 permits were withdrawn.

“We continue to be concerned about the impact of the current downturn in homebuilding on our overall long-term market,” said James Vagle, CEO of Housing First Minnesota, the state’s homebuilder trade group.

It’s a sharp turn from this spring, when Twin Cities homebuilders recorded a record April for residential building permits.

“The demographics remain the same: we have a large population in their prime home buying age and a shortage of homes in our area,” Vagle said. “It’s more important than ever that lawmakers and leaders look for innovative ways to bring startup homes back to Minnesota.”

Among local towns in CCX News’ viewing area, Plymouth ranked 4th in permits obtained with 19, behind only Elk River with 29, Woodbury with 32 and Lakeville, which took first place with 37.

A recent report by Minneapolis Area Realtors also shows a decline in home sales, which is attributed to rising mortgage rates and home prices.

“High interest rates and rising home prices continue to force many buyers to put plans on buying a new home on hold,” said James Julkowski, chairman of Housing First Minnesota’s board of directors.

Julkowski pointed to potential buying opportunities as stocks rose slightly.

“A glimmer of hope, as the market descends from the competitive level we’ve seen for the past two years with the historically low inventory of homes for sale, is that many buyers will find opportunities in this market,” a- he declared.

File photo/New home construction is more prevalent in suburbs like Buffalo.

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