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Homebuilding activity declined in the Twin Cities this month as the effects of COVID-19 reached the construction sector. Single-family permits decreased 25% year-over-year to 396 permits pulled in May 2019. Multifamily activity, which had already begun to slow, saw the number of units falling by 72% compared to May 2019, with 365 units permitted.
“We are now seeing some delayed effect of COVID-19 on the new-home market,” said Gary Kraemer, president of Housing First Minnesota. “Despite the dip in May starts, many builders are still reporting strong interest from buyers. Interest rates remain low and our members have measured expectations for 2020.”
According to data compiled by the Keystone Report for Housing First Minnesota, there were 411 permits issued for a total 761 units during four comparable weeks in the month of May.
“Lower new housing starts will only exacerbate the state’s housing inventory problem,” said David Siegel, executive director of Housing First Minnesota. “Although this decline in starts was expected, it underscores the importance of zoning reform and other regulatory relief that have the ability to lower new-home costs, allowing the needed and more affordably priced homes to enter the market.”
For the month, Lakeville took the top spot with 45 permits issued. Otsego came in next with 28 permits, followed by Cottage Gove and Plymouth, with 19 permits, and St. Michael and Woodbury with 16 permits.