Preliminary census numbers show historic low for new housing units

ST. PAUL, MN – March 11, 2009 – (RealEstateRama) — – The seven-county Twin Cities metropolitan area tallied only 4,458 new housing units in 2008, according to preliminary data for new residential construction from the U.S. Census Bureau. The 2008 production was the lowest since statistics were first collected in 1970 and was less than a quarter of peak production in the region within the past decade.

Among the 25 most populous metropolitan areas in the United States, the Twin Cities region ranked 16th, with 1.8 permits per thousand residents. Houston ranked first with 7.6 permits per thousand, and Detroit ranked last with less than 1 permit per thousand residents.

From an economic perspective, many sectors are affected by slowing housing production, said Metropolitan Council Research Manager Libby Starling, including both the residential construction industry and industries that supply construction, from timber mills to window manufacturers.

“Builders have responded to excess new-home inventory resulting from weaker new-home sales by reducing construction starts,” Starling said.

Most notable among the data, Starling said, are the trends in U.S. metropolitan areas. For example, production in the Twin Cities region dropped about 40 percent from 2007 to 2008, a sharper decline than the 36 percent drop experienced in the rest of the country. In the earlier years of this decade, the Twin Cities region was above the national average for housing production, ranking 7th among the nation’s largest metro areas with 9 permits per thousand residents.  However, the region’s steeper drop in new construction has led to permits per capita below the national average in 2008.

Seven out of 10 of the new housing units authorized in 2008 were in the region’s developing communities, up from 6 out of 10 over the decade. Minneapolis and St. Paul accounted for 9 percent of permits, down from 17 percent in 2007. Rural areas account for only 5 percent of building permits, compared to 9 percent in 2007. Hennepin County had the highest number of permits at 1,561, followed by Washington County at 819.

Maple Grove had the highest number of new single-family units with 231, followed closely by Woodbury with 216. Minneapolis had the highest number of multi-family units with 317, followed by Lakeville with 157 and Edina with 150.

Permits for the six counties surrounding the seven-county area – Chisago, Isanti, Sherburne, and Wright counties in Minnesota, and Pierce and St. Croix counties in Wisconsin – were down 50 percent from 2007, to a 17-percent share of all residential permits for the 13-county Metropolitan Statistical Area

Building costs per housing unit in the seven-county metro area averaged $273,200 for single-family units and $137,300 for multi-family units. This reflects a 1 percent increase for single-family units from 2007 to 2008, below the rate of inflation, and a 6 percent increase for multi-family units, consistent with normal trends.

For full statistics and analysis, read the MetroStats report.