Twin Cities homebuilding mixed as multifamily permits fall

Twin Cities homebuilding activity was mixed in October as single-family housing starts ticked up and planned apartment units were down compared to last year.

During the month, metro area cities permitted 788 new homes overall, according to the Keystone Report. That includes 616 single-family houses, up 4%, and 172 multifamily units, down 51%.

A 135-unit apartment project in Apple Valley was the only multifamily development of note permitted during the month, according to Keystone, which tracks homebuilding permits in the 13-county metro area.

Trident Development held a ceremonial groundbreaking this week for the $36 million Apple Valley project. Known as Orchard Place Apartments, the project will offer studio, one-, two- and three-bedroom apartments when it opens in late 2026, according to the developer.

From a financing standpoint, the Orchard Place project was “probably no more challenging than typical,” Roger Fink, senior vice president of Trident Development, said in a recent interview. “A lot of our investor contacts easily saw the potential of this opportunity, so I wouldn’t say it was extraordinarily difficult.”

From a longer-term perspective, planned housing units are still running slightly ahead of last year. For the year to date through October, single-family permits (5,253) are up 3% and planned multifamily units are up 10%, according to Keystone.

Demand for new homes “remains strong in our market, and it is essential to maintain this pace to meet that need,” Art Pratt, board chair of Housing First Minnesota, said in a press release.

James Vagle, CEO of Housing First Minnesota, said in an interview that economic uncertainty is keeping some buyers on the sidelines.

“The demand is still there. It’s really a matter of that constellation of factors coming into alignment to allow the demand to come off the sidelines.”

Vagle reiterated that the market needs “all types of homes,” including apartments, condos, townhomes and villas.

“That’s got to be a priority for lawmakers to work with the industry and help restructure some of the liability rules that would stimulate more multifamily growth. We need that from a housing supply perspective, but also from an affordability perspective,” Vagle said. “Multifamily ownership options are some of the most affordable on the market, so we really need to lean in on that problem.”

The monthly October report was released the same day that the Federal Reserve announced another interest rate cut. As reported Thursday by the Associated Press, the average long-term mortgage rate dropped to 6.17%, down from 6.72% a year ago.

Apple Valley permitted the most units in October (136), followed by Rosemount (85), Lakeville (59), St. Michael (42) and Corcoran (39), according to Keystone.