Twin Cities homebuilders saw a slow start to their year in January as mortgage rates and overall affordability woes continued to keep potential buyers out of the market.

According to the latest data from the Keystone Report, homebuilders in the Twin Cities pulled permits for single-family homes at a 46% slower rate than January 2021. Builders in the metro obtained just 328 single-family permits for the month.

Likewise, multi-family construction also saw slowdowns in January. The sector pulled only 418 permits for the month – a drop of 53% over the previous year.

“Homebuilders continue to see the market pause as homebuyers reevaluate what they can afford with the current mortgage rates.” commented John Quinlivan, 2022 board chair of Housing First Minnesota. “The demand for new housing is still there, it’s a matter of when rates will bring homebuyers back into the market.”

Builders in January pulled the highest number of permits in the city of Rosemount with 37 permits. Maple Grove was the second-highest with 28 permits. The rest of the top five cities for the month included Woodbury with 27, St. Michael with 19 and Farmington with 18 permits.

“Our housing market remains widely undersupplied, we need new housing in Minnesota,” said James Vagle, chief executive of Housing First Minnesota. “The impacts from this slowdown in new construction will be felt for years to come as our region grapples with a shortage of housing.”

Download the full January report here.