Issuu

VOL. 10 ISSUE 3, SEPT. 2026

THE MINNESOTA HOUSING INDUSTRY NEWS SOURCE BY HOUSING FIRST MINNESOTA • HOUSINGINDUSTRYNEWS.ORG

U.S. Sen. Amy Klobuchar (left) and Minnesota House Speaker Lisa Demuth (right) discuss housing issues at State Fair forum.

Klobuchar, Demuth outline housing priorities at State Fair forum

INSIDE THIS ISSUE

Minnesota gubernatorial candidates discuss land use, construction costs, and the state’s housing shortage in standalone discussions with KARE 11 Minnesota’s housing shortage took center stage at the State Fair as the state’s two major-party candidates for governor outlined their approaches to increasing home construction and improving affordability. U.S. Sen. Amy Klobuchar (DFL) and Minnesota House Speaker Lisa Demuth (R) appeared separately in back-to-back interviews on Wednesday, Sept. 2, in conversations moderated by KARE 11 political reporter Danny Spewak. The event, titled Minnesota’s Housing Future: Candidate Conversations, was presented in partnership with Housing First Minnesota, Family Housing Fund, and Greater Minnesota Housing Fund. Although the candidates emphasized different causes and policy tools related to the housing shortage, both identified building more homes as central to the state’s response. Their comments placed land use rules, local permitting, regulation, and the mix

of housing types among the issues likely to remain prominent when Minnesota’s next governor takes office. Klobuchar expressed support for many provisions in the Minnesota Starter Home Act, a bipartisan legislative proposal intended to expand housing options and address local barriers to construction. “I would support so many elements of [the Minnesota Starter Home Act],” Klobuchar said, adding that passage of the measure is “really important.” The state’s senior senator also pledged to close the state’s housing shortage by the end of her first term. Demuth focused her comments on whether housing policies result in homes actually hitting the market, saying she would evaluate a housing plan by the number of units built and the time required to deliver them. She cited permitting delays and regulatory requirements as factors that can slow projects. CONTINUED >> PAGE 6

Building permit lawsuit update PAGE 5

Federal housing bill passes PAGE 8

Celebrating Hope House PAGE 17

Housing industry leads the way for Lewis House initiative in Eagan Every person deserves a place to feel safe. For hundreds of survivors of domestic and sexual violence in Dakota County, places like this are in short supply. However, through a powerful partnership between 360 Communities, PulteGroup, Inc., Greiner Construction, and the Housing First Minnesota Foundation, that is about to change. Lewis House, a new 50-bed, apartment-style shelter in Eagan, will offer more than just a roof over someone’s head—it will provide safety, dignity, healing, and hope. CONTINUED >> PAGE 16

HOUSING INDUSTRY NEWS

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BOARD CHAIR NOTE

HOUSING INDUSTRY NEWS

Turning Momentum Into Action At Housing First Minnesota, our work is guided by a simple but powerful belief: Homeownership opportunities should be within reach for all Minnesotans. The challenges facing housing in our state are significant. Families face rising costs, communities lack housing choices, and regulatory and development barriers make it increasingly difficult for our industry to deliver homes at attainable price points. Addressing those challenges will require leadership, collaboration, and a willingness to rethink the policies that shape how and where we build. That is why it was so significant to see housing take center stage at the Minnesota State Fair. Housing First Minnesota, in partnership with Family Housing Fund and Greater Minnesota Housing Fund, recently hosted separate housing conversations with Minnesota’s two major-party candidates for governor—U.S. Sen. Amy Klobuchar and Minnesota House Speaker Lisa Demuth. Moderated by KARE 11 political reporter Danny Spewak, the forum brought the issues our industry works on every day directly into the statewide conversation. With Minnesota facing a shortage of nearly 100,000 homes and apartments, these conversations could not

come at a more important time. Both candidates spoke about the need to expand housing supply, address affordability, and remove barriers that make building harder and more expensive. While policymakers will undoubtedly approach these challenges differently, the growing recognition that Minnesota must build more housing represents meaningful progress. For Housing First Minnesota, hosting this forum was about more than one event—it reflected the work our organization and our members have done for years to establish housing as a fundamental issue for Minnesota’s economic strength, community vitality, and quality of life. When candidates for the state’s highest office discuss housing supply, affordability, land use, and the barriers to homeownership, our industry has an important opportunity—and responsibility—to turn that attention into action. As we look toward the 2027 legislative session, Housing First Minnesota will continue working with leaders across the state and political spectrum to advance practical solutions that increase housing supply, modernize outdated regulations, support responsible growth, and create more attainable paths to homeownership.

Vol. 10 Issue 3, Sept. 2026 PUBLISHER, CHIEF EXECUTIVE OFFICER James Vagle ART DIRECTOR Mandy Finders GRAPHIC DESIGNER Pa Gar Vang OPERATIONS MANAGER Casey Scozzari SENIOR DIRECTOR, MARKETING & COMMUNICATIONS Katelyn Bloomquist

John Kraemer 2026 Board Chair, Housing First Minnesota Onward, John Kraemer Board Chair, Housing First Minnesota

SENIOR DIRECTOR, CLIENT STRATEGY & GROWTH Devin Lehnhoff ENGAGEMENT ACCOUNT EXECUTIVE Allyson Sample CONTRIBUTING WRITERS Kristen Crossman Nick Erickson Mark Foster

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Kristi Jorgensen Elizabeth Roubik Kate Wigley HOUSING FIRST MINNESOTA BOARD CHAIR John Kraemer Housing Industry News is a publication of Housing First Minnesota. Housing Industry News is published and distributed four times per year to housing industry professionals and others associated with the homebuilding industry. Neither the advertisers, nor Housing First Minnesota, will be responsible or liable for misinformation, misprints, typographical errors, etc., herein contained. For address change information, contact Housing First Minnesota. Suggestions, ideas, and letters are always welcome. HOUSING INDUSTRY NEWS 2960 Centre Pointe Drive Roseville, MN 55113 info@HousingFirstMN.org housingindustrynews.org Housing Industry News is published by Housing First Minnesota. Entire contents copyright 2026.

Housing First Minnesota brings together builders, remodelers, designers, and industry suppliers. By joining, you don’t just become a member— you gain access to a powerful community. From exclusive networking events and unmatched marketing opportunities to a trusted consumer brand, continuing education, and a strong advocacy voice at the Capitol, membership unlocks the tools and connections you need to grow, lead, and succeed in Minnesota’s homebuilding industry.

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Housing First Minnesota is the voice for homebuilders, remodelers, and all who are dedicated to building safe, durable homes at a price Minnesotans can afford. Housing First Minnesota is dedicated to advancing the American dream of homeownership for Minnesotans and is the leading resource for housing-related issues in Minnesota. This advocacy work has never been more important. The housing industry remains under intense regulatory and political pressures that impact Minnesota homeowners’ ability to buy, build, and remodel their dream home. Housing First Minnesota supports reasonable policies, regulations, and protections, but our call for affordability for families is a voice that must be heard. Learn more at HousingFirstMN.org.

THE HOUSING BEAT

Across the country, there is much talk about housing. HERE ARE SOME OF THE LATEST QUOTES ON THE STATE OF THE INDUSTRY

Housing affordability has improved from a year ago, and recent increases in purchase and refinance applications suggest that borrowers continue to respond to even modest changes in mortgage rates” SAM KHATER CHIEF ECONOMIST AT FREDDIE MAC, ON AUGUST’S MORTGAGE RATE DIP—THE FIRST DROP IN SIX WEEKS

Homeownership is an important part of the American dream, and we should be doing everything we can to make it attainable for more Minnesotans. That means taking a close look at the regulations that make building and buying a home more difficult.” SEN. JORDAN RASMUSSON FOLLOWING A REGIONAL HOUSING ROUND TABLE WITH THE U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT (HUD) IN JUNE

Housing starts were down sharply from both last [July] and last year, underscoring the need for a stronger policy response. America cannot build its way out of the housing shortage without reforming zoning, speeding up approvals, and reducing regulatory costs that make new housing harder to produce.” NICK ERICKSON EXECUTIVE DIRECTOR OF HOUSING AFFORDABILITY INSTITUTE, ON PERMITTING DATA FROM THE U.S. CENSUS

Pending home sales eased in July as geopolitical tensions resurfaced, pushing oil prices to their highest level since May and putting upward pressure on mortgage rates and inflation. Rates climbed more than 20 basis points throughout the month, eroding some of the year-over-year affordability advantage that had quietly been supporting buyer activity all spring.” HANNAH JONES SENIOR ECONOMIST FOR REALTOR.COM, ON THE SUMMER HOUSING MARKET

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HOUSING INDUSTRY NEWS | 3

REGULATORY AFFAIRS

HVAC arc fault concerns return In 2023, the National Fire Protection Association (NFPA) temporarily suspended enforcement of the 2023 National Electrical Code’s expanded arc-fault circuit interrupter (AFCI) requirements in Section 210.12 after reports that some HVAC equipment was causing nuisance tripping. Manufacturers, contractors, and code officials raised concerns that certain heating and cooling systems were producing electrical signatures that AFCI devices interpreted as arc faults, even when no hazardous condition existed. The temporary enforcement suspension, which expired on Sept. 1, 2026, was intended to give manufacturers and standards organizations time to study the issue, develop testing protocols, and improve compatibility between HVAC equipment and AFCI protection. Industry groups across the country, including Housing First Minnesota, are raising concerns that the suppliers and the code have not been able to meet the requirements to lift the temporary stay on the enforcement of this provision. Water reuse rules reach boiling point A coalition of industry associations, local governments, labor organizations, and environmental groups is urging the Minnesota Plumbing Board to reject the proposed adoption of Chapter 15 of the Uniform Plumbing Code, arguing the changes would significantly expand plumbing regulations beyond their intended scope. Chapter 15 of the UPC governs alternative water sources for non-potable uses, such as stormwater runoff for irrigation. In a joint letter, the organizations contend the proposal would increase construction and compliance costs for homeowners, developers, municipalities, employers, and property owners while creating new permitting, monitoring, and reporting requirements. The coalition also warns the revisions could eliminate longstanding practices by requiring licensed plumbers to perform work currently handled by certified irrigation professionals, threatening thousands of jobs and disrupting Minnesota’s irrigation industry. Chapter 15 rulemaking is ongoing and is being handled separately from the rest of the upcoming Minnesota Plumbing Code update.

Industry advocates are concerned that the proposal would increase costs for homeowners.

Gov. Walz names new DLI commissioner Gov. Tim Walz named Kate Perushek to the post of Commissioner of the Department of Labor and Industry (DLI) in July. Perushek has worked at the department since 2019, where she directed Legislative Services, served as an assistant commissioner, and supervised divisions including Apprenticeship Minnesota and Labor Standards. “Perushek brings deep knowledge of labor policy, workforce development, and state government to this role,” Walz said in a statement. “She has been an integral part of DLI’s leadership team and has helped drive many of the department’s most important initiatives. Her experience and commitment to public service make her exceptionally well-qualified to lead the agency forward.” The announcement came after Walz appointed former DLI Commissioner Nicole Blissenbach to serve as a judge in Minnesota’s Fourth Judicial District in June. Blissenbach had led the DLI since 2023 after previously serving as deputy commissioner and assistant commissioner. Before joining the agency, she practiced labor law and worked as an attorney for Education Minnesota.

4 | HOUSING INDUSTRY NEWS

Perushek testifying before a committee in the Minnesota House of Representatives (Photo: MN House of Representatives)

LEGAL

Building permit fee lawsuit to be heard by state’s top court A five-justice panel from the Minnesota Supreme Court will hear the case about building permit overcharges. Current Minnesota Supreme Court Associate Justices Gordon Moore III and Karl Procaccini will join retired justices G. Barry Anderson, Chris Dietzen, and Sam Hanson. Housing First Minnesota argues that both cities violated Minnesota Rule 1300.0160 by inflating permit fees far beyond the actual cost of service, turning them into an unlawful revenue source. Under state law, building permit fees must be fair, reasonable, and proportionate to the city’s costs. Earlier this year, in the consolidated matters of Housing First Minnesota v. the Cities of Corcoran and Dayton, a three-judge Court of Appeals upheld a district court ruling. This is not the only legal challenge to building permit fees in Minnesota. A potential class action lawsuit is pending against the City of St. Paul, stemming from a case in which a homeowner alleged overcharging of building permit fees and brought the suit against the city last year. Disclosure: The appellant, Housing First Minnesota, is the publisher of Housing Industry News.

The Minnesota Supreme Court will hear the lawsuit raised regarding building permit fee overcharges.

HOUSING INDUSTRY NEWS | 5

HOUSING ON THE HILL CONTINUED FROM PAGE 1

Klobuchar, Demuth outline housing priorities at State Fair forum Minnesota gubernatorial candidates discuss land use, construction costs, and the state’s housing shortage in standalone discussions with KARE 11 “We have to make sure we actually are having units built to house people in whatever way is necessary,” Demuth said. She listed single-family homes, townhomes, condominiums, and apartments among the housing types that could contribute to the state’s supply. On affordability, Klobuchar connected additional construction with easing pressure on prices across the market. She said increasing the supply of affordable and market-rate housing could help households that are close to being able to purchase a home. Demuth emphasized how mandates and regulations affect new-construction costs. She said added requirements increase home prices and can cause prospective buyers to postpone homeownership. The forum was held against a backdrop of declining housing production and rising new-home prices. According to figures provided by the event organizers, Minnesota is short nearly 100,000 homes and apartments—almost twice the shortage identified by a state task force in 2018. Organizers also reported that statewide homebuilding and

The forum discussion comes as housing becomes a top-tier issue among voters.

apartment construction has fallen nearly 38% from its 2021 peak, while permitting in the Twin Cities has declined more than 42%. Those figures reflect several overlapping questions for state policymakers: how much authority local governments should retain over development, which building and land use requirements provide public benefits, and how the costs of those requirements affect what can be built and purchased. The candidates’ remarks indicated that housing supply will be a significant issue in the campaign, even as they emphasized different ways state government should respond. The discussion also pointed toward another legislative debate over land use reform in 2027. Proposals involving permitting timelines, zoning flexibility, and starter-home construction have generated bipartisan interest at the State Capitol, but broad changes

have also required negotiations among legislators, cities, housing organizations, and the construction industry. The forum offered an early comparison of the candidates’ housing priorities: Klobuchar highlighted legislation and supply growth across affordable and market-rate housing, while Demuth stressed measurable construction results and reductions in regulatory delays and costs. With the shortage affecting communities across Minnesota, the next governor will enter office facing pressure from housing advocates, builders, and prospective homebuyers to translate campaign proposals into additional homes, with continued resistance from local officials. The direction of that response, and the balance between state action and local control, is expected to remain a central question into the next legislative session.

Audience members listen as both gubernatorial candidates explain how they would address Minnesota’s housing crisis if elected.

6 | HOUSING INDUSTRY NEWS

HOUSING ON THE HILL

Housing First Minnesota honors 2026 legislative champions

Housing First Minnesota’s annual awards recognize legislators who championed housing policies during the 2026 legislative session.

Housing First Minnesota announced its 2026 Housing Leadership Awards to 24 lawmakers whose work during the legislative session supported Minnesota’s homebuilding industry and efforts to make homeownership more attainable. The recipients include 11 members of the Minnesota House and 13 members of the Minnesota Senate, representing communities across the state and both sides of the political aisle. Housing First Minnesota said the lawmakers distinguished themselves by advancing policies intended to improve housing affordability, expand the supply of homes, and create additional opportunities for homeownership. A central accomplishment of the 2026 session was passing legislation that prevents local governments from requiring developers to create unnecessary homeowners associations (HOAs) as a condition of residential development. For builders, the new policy addresses a local requirement that could add complexity to new projects and impose continuing expenses on homebuyers. Housing First Minnesota said eliminating unnecessary HOA mandates will give housing providers more flexibility while reducing the long-term costs of owning a newly constructed home. “Housing affordability remains one of the most pressing issues facing Minnesota families,” said Mark Foster, vice president of legislative and political affairs at Housing First Minnesota. Foster credited the honorees with working across party lines and engaging with the complex policy questions affecting housing production and homeownership. Their efforts are particularly significant for an industry navigating high construction

and development costs, limited housing inventory, and continued affordability challenges for prospective buyers. The 2026 honorees from the Minnesota House are Reps. Kristin Bahner of Maple Grove, Dave Baker of Willmar, Nathan Coulter of Bloomington, Jeff Dotseth of Kettle River, Mike Howard of Richfield, Spencer Igo of Wabana Township, Liish Kozlowski of Duluth, Larry Kraft of St. Louis Park, Shane Mekeland of Clear Lake, Jim Nash of Waconia, and Kari Rehrauer of Coon Rapids. Senate recipients are Sens. Liz Boldon of Rochester, Gene Dornink of Brownsdale, Rich Draheim of Madison Lake, Steve Drazkowski of Mazeppa, Glenn Gruenhagen of Glencoe, Amanda Hemmingsen-Jaeger of Woodbury, Karin Housley of Stillwater, Jeff Howe of Rockville, Eric Lucero of St. Michael, Susan Pha of Brooklyn Park, Lindsey Port of Burnsville, Jason Rarick of Pine City, and Jordan Rasmusson of Fergus Falls. The geographic and political diversity of the recipients reflects the statewide nature of Minnesota’s housing challenges. Although market conditions and development patterns vary among urban, suburban, and rural communities, builders statewide regularly encounter regulatory costs and other barriers that can limit the types and number of homes they can deliver. Housing First Minnesota presents its Housing Leadership Awards annually to legislators who demonstrate leadership on policies that increase housing opportunities, strengthen the housing market, and improve affordability. The association said it plans to continue working with legislators from both parties on policies that reduce barriers to new-home construction and broaden homeownership opportunities for Minnesota families.

Recipients of the 2025 Housing Leadership Award

Representative Kristin Bahner (Maple Grove)

Representative Dave Baker (Willmar)

Senator Liz Boldon (Rochester)

Representative Nathan Coulter (Bloomington)

Senator Gene Dornink (Brownsdale)

Representative Jeff Dotseth (Kettle River)

Senator Rich Draheim (Madison Lake)

Senator Steve Drazkowski (Mazeppa)

Senator Glenn Gruenhagen (Glencoe)

Senator Amanda Hemmingsen-Jaeger (Woodbury)

Senator Karin Housley (Stillwater)

Senator Jeff Howe (Rockville)

Representative Michael Howard (Richfield)

Representative Spencer Igo (Wabana Township)

Representative Liish Kozlowski (Duluth)

Representative Larry Kraft (St. Louis Park)

Senator Eric Lucero (St. Michael)

Representative Shane Mekeland (Clear Lake)

Representative Jim Nash (Waconia)

Senator Susan Pha (Brooklyn Park)

Senator Lindsey Port (Burnsville)

Senator Jason Rarick (Pine City)

Senator Jordan Rasmusson (Fergus Falls)

Representative Kari Rehrauer (Coon Rapids)

HOUSING INDUSTRY NEWS | 7

HOUSING ON THE HILL

The 21st Century ROAD to Housing Act was passed into law this summer.

Bipartisan federal housing bill becomes law Congress approved the 21st Century ROAD to Housing Act, the most significant overhaul of federal housing policy in decades, this summer. The bill passed 350-32 in the U.S. House and 85-5 in the U.S. Senate. President Trump allowed the bill to become law without his signature. The overwhelming bipartisan support comes as polling shows the public wants action on housing. The Bipartisan Policy Center found that 79% of voters identify the cost of housing as an extremely important or very important issue, and 63% say they would be more likely to vote for their representative or senator if they helped pass legislation to build more affordable homes and lower housing costs. What’s in the bill The legislation updates federal standards and seeks to improve financing options for manufactured homes, aiming to make them more accessible to buyers. Homeownership is another major component of the package. The legislation updates several Federal Housing Administration programs, expands access to smaller mortgage loans, and makes changes intended to help first-time buyers navigate the home financing process. It also strengthens housing counseling programs and updates several long-standing federal housing initiatives. Among the bill’s most closely watched provisions are new restrictions on institutional ownership of single-family homes. The legislation limits additional purchases by the nation’s largest corporate landlords—an effort supporters say is intended to reduce competition for prospective homebuyers in markets with limited inventory.

8 | HOUSING INDUSTRY NEWS

The package also reauthorizes and updates several existing federal housing programs, including disaster recovery initiatives and housing assistance efforts. While the legislation does not create a sweeping new federal housing program, it makes broad changes to existing policies to improve how those programs operate. “The 21st Century ROAD to Housing Act helps make the American dream a reality for everyday families,” said House Majority Whip Tom Emmer (R-MN). “By lowering costs and cutting red tape, citizens across the country will have more affordable, better access to the housing market.” Minnesota’s senators hands-on in crafting bill Minnesota Sens. Amy Klobuchar and Tina Smith both secured provisions in the final legislation. Smith’s bipartisan Rural Housing Service Reform Act updates U.S. Department of Agriculture rural housing programs for the first time in decades—a change expected to help preserve up to 400,000 affordable homes nationwide, including more than 9,000 units in Minnesota’s rural communities. “The lack of affordable, decent housing in this country has been a major problem for working families for years, but with the 21st Century Road to Housing Act becoming law, we’re choosing a different path: Build more housing and protect the homes we already have from falling into disrepair,” said Smith. Klobuchar’s Housing Supply and Affordability Act establishes a U.S. Department of Housing and Urban Development regional planning grant program to help states and local governments modernize zoning and land use policies to support additional housing development.

“Democrats and Republicans came together to make it easier to afford a home,” said Klobuchar (D-MN). “The 21st Century ROAD to Housing Act will help build more homes, including in rural communities. This bipartisan legislation includes my bill to give state and local governments the tools and zoning flexibility they need to build more homes.” Housing groups respond Housing organizations across the industry have described the legislation as one of the most consequential federal housing reforms in nearly 50 years. “This is the most significant federal housing legislation in a generation, and it arrived the way durable policy should: through commanding bipartisan majorities in both chambers, at a moment when Washington rarely agrees on anything,” said Mike Kingsella, CEO of Up for Growth. Although opinions differ on whether the package goes far enough, there is broad agreement that increasing the nation’s housing supply will require action at every level of government. “The 21st Century ROAD to Housing Act contains several meaningful housing reforms, but no federal bill can solve a housing shortage on its own,” said Nick Erickson, executive director of Housing Affordability Institute. “The greatest obstacles to building homes remain at the local level. What this legislation does is strengthen the foundation for the next generation of state and local reforms.” However, it establishes a new framework to boost supply, improves affordability, and gives tools to state and local communities to address housing concerns.

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HOUSING INDUSTRY NEWS | 9

AROUND THE STATE

CMBA pushes back on St. Cloud building fees

Housing momentum keeps building in Rochester

Does raising building fees make sense at a time when a city is falling behind in needed development? The answer from the Central Minnesota Builders Association (CMBA) is a firm “no.” This summer, CMBA wrestled with St. Cloud city officials over a proposal to dramatically increase the city’s building fees schedule. The City Council voted on Aug. 31 to raise fees by a total of $800,000 per year, falling heaviest on commercial projects, but also adding significantly to the cost of each new residential unit of housing, even as the city says it needs more homes people can afford to live in. The boost in building fees comes on the heels of major increases in St. Cloud’s SAC/WAC/TAC charges over the last four years. “These new fee increases will have a chilling effect on the development the City of St. Cloud says it needs,” said CMBA Government Affairs Consultant Steve Gottwalt, who testified against the increases at a recent City Council hearing. CMBA also reminded the City of St. Cloud that it must follow Minnesota law. Under Minnesota Rules Part 1300.0160, building fees must be “fair, reasonable, and proportionate to the actual cost of the service for which the fee is imposed.” The city never showed details of the actual costs justifying each building fee and its increases. According to the charter for the city of St. Cloud, 25% of its building fees are directed towards a general development fund, a practice that does not tie back to actual cost. Similar lack of transparency on building fees recently led to a lawsuit against the Minnesota cities of Corcoran and Dayton—a case now before the Minnesota Supreme Court. “CMBA prefers to collaborate with area leaders on development and building issues,” said CMBA Executive Director Wanda Schroeder. “We are partners in helping achieve the development our communities need and want.” CMBA hosts regular roundtable discussions with area mayors and city development directors to share plans and explore ways to spur more development. Schroeder added, “Affordability is an important goal for builders and cities, and we need sustainable solutions that do not include raising the costs of development.”

Rochester’s residential construction surge is still picking up steam, fueled by strong demand and Mayo Clinic’s ongoing “Bold. Forward. Unbound.” strategic expansion plan. Downtown is especially busy. Sherman Associates just closed on a $136.5 million project across the street from the Mayo Civic Center that will bring 349 new housing units—76 of them affordable for senior citizens—right near Mayo Clinic. The project also includes 273 market-rate units, with 52 furnished short-term units geared toward health care workers and visitors. Construction has already started, with an opening date planned for spring 2028. All told, more than 1,600 housing units are in some stage of development in and around downtown. Additionally, sizable single-family and townhome projects are moving ahead on the edges of the city. Lennar is rolling out hundreds of homes at its Pebble Creek community in the northwest, including a dedicated 55-plus community. D.R. Horton also has plans for roughly 580 homes at the Graham Acres community. And Pulte’s Dell Webb brand plans to build at least 300 units for active seniors. Fresh annexations and approvals continue to support more growth, helping close the gap after years of building only around 200 homes per year—a shortage of around 800.

10 | HOUSING INDUSTRY NEWS

Pat Sexton Executive Director, Rochester Area Builders Affordable housing development is steady as well, with projects like DevCo’s 252-unit complex and Commons on Bear Creek adding options for a wider range of incomes. The work is far from finished, but the momentum we’re seeing today is an encouraging step toward a stronger housing future for Rochester. Pat Sexton Executive Director Rochester Area Builders

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MARKET REPORT

Housing market report

State of Minnesota

Moorhead

Metro homebuilding falters in spring

SOURCE: CITY OF MOORHEAD

Homebuilding in the Twin Cities metro showed positive signs in July, with activity up 10% from the same period last year. Homebuilders pulled permits for 552 single-family homes in July. Multifamily activity, however, saw a steep drop-off in activity for the first time this summer. Builders reported just 20 multifamily units under construction— accounting for under 5% of all construction activity. The Keystone Report reported 554 permits issued, for a total of 572 housing units during the four comparable weeks in July.

7,727

Duluth

263

Year-to-Date Single-Family Construction in Select Cities Through July 2026 SOURCE: U.S. CENSUS

SOURCE: U.S. CENSUS

St. Cloud

SOURCE: CITY OF ST. CLOUD

Twin Cities

5,205

Mankato

134

SOURCE: U.S. CENSUS

Rochester

330

SOURCE: U.S. CENSUS

HOUSING FIRST MINNESOTA COLLECTED THE ABOVE PERMIT INFORMATION FROM AVAILABLE PUBLIC RESOURCES.

JULY 2026

$408,000

$375,000

Minnesota Construction Employment Past 5 Months SOURCE: DEED

JULY 2025

3.3%

$395,900

2.7%

JULY 2025

$365,000

Y-Y Change

Twin Cities Median Sales Price

Minnesota Median Sales Price

SOURCE: MINNEAPOLIS REALTORS®

SOURCE: MINNESOTA REALTORS®

Twin Cities Construction Employment Past 5 Months SOURCE: DEED

CURRENT

FUTURE

South - 68

Midwest - 68

Northeast - 63

Regional Remodeling Market Indices, 2026 Q2 SOURCE: NAHB

The Overall Remodeling Market Index is calculated by averaging the Current Marketing Index and the Future Market Indicators Index. Any number over 50 indicates that more remodelers view remodeling market conditions as higher than the previous quarter. Results are seasonally adjusted.

12 | HOUSING INDUSTRY NEWS

Employment Update Minnesota’s non-seasonally adjusted unemployment in July was unchanged from the previous month, according to the Minnesota Department of Employment and Economic Development. The rate remained at 4.6%. The national unemployment rate also remained unchanged during the same time period. Construction employment in Minnesota contracted by 1,000 in July across all sectors of the industry. SIGN UP TO BE A PART OF THE HOUSING MOVEMENT • HOUSINGINDUSTRYNEWS.ORG

MARKET REPORT

New report finds housing market lost ground in 2025 Housing Affordability Institute examines affordability, homeownership, and housing production nationwide The nation’s housing challenges continued to deepen in 2025, according to the latest edition of United States of Housing, Housing Affordability Institute’s annual report on housing and homeownership in America. While median prices for both new and existing homes declined slightly from the previous year, the report found that the broader housing market moved in the wrong direction across several key measures. Housing costs continued to consume more than 30% of median household income, while homeownership and new housing production both declined. The national homeownership rate fell for the second consecutive year to 65.2%. The challenges were especially pronounced for first-time buyers. Their share of the market dropped to a record-low 21%, while the average age of a firsttime buyer climbed to an all-time high of 40. At the same time, the nation continued to fall behind on the housing production needed to address its long-standing shortage. Just over 1.43 million housing units were permitted in 2025, a 3.1% decline from the previous year and the fourth consecutive annual decrease. Since 2021, total permitting has fallen nearly 18%. Housing completions also declined 7.9% as builders worked through projects permitted in previous years.

The report includes a new state-by-state look at housing affordability, homeownership, and production. In Minnesota, the homeownership rate reached 71.2%, ranking 13th nationally. However, the state permitted nearly 38% fewer total housing units in 2025 than it did five years earlier. Single-family permitting fell nearly 23% over that same period. Affordability remains a significant concern as well. In December 2025, the estimated monthly payment on a median-priced new home in Minnesota accounted for 47.2% of the state’s median household income. For an existing home, the share was 31.7%. The report calls for a broader policy approach that goes beyond zoning and land-use reform to address building codes, environmental regulations, labor laws, infrastructure and other factors influencing housing costs and production. “America once valued housing affordability,” said Nick Erickson, executive director of Housing Affordability Institute. “Coming out of the Great Recession, policymakers left the housing industry with little more than low interest rates to support production. Achieving long-term stability in housing production will require deliberate action from policymakers at every level of government.”

A new report finds that housing affordability continues to be a growing concern across the country.

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HOUSING INDUSTRY NEWS | 13

INDUSTRY IN ACTION

Barriers to new homeownership opportunities subject of federal housing town hall Three regional HUD administrators meet with industry leaders, legislators Housing First Minnesota convened a federal housing town hall earlier this summer, bringing together leaders from the U.S. Department of Housing and Urban Development (HUD)’s regional offices, state lawmakers, and members of Minnesota’s homebuilding industry to discuss policies that affect new home production and homeownership opportunities. The discussion featured HUD Region 5 Administrator Duey Stroebel, Acting Region 7 Administrator, and Region 8 Administrator Tim Geitner. The officials met with local builders and developers to hear firsthand how state and local regulations influence the cost and availability of new housing across Minnesota. A primary focus of the conversation was local land use policy and the barriers that limit the construction of entry-level homes. Industry participants highlighted zoning requirements, minimum lot sizes, and other local regulations that can restrict the development of smaller, more attainable homes. Those discussions underscored the need for the Minnesota Starter Home Act, legislation aimed at expanding starterhome opportunities by updating local land use standards. The town hall also highlighted the importance of the proposed 2026 Homeowners Association Reform legislation. Sen. Jordan Rasmusson and Rep. Spencer Igo discussed the proposal with federal officials and industry representatives, outlining how updates to Minnesota’s HOA statutes could improve transparency, governance, and predictability for homeowners and developers while supporting continued housing development.

The summer tour opened the doors to 17 luxury homes across the Twin Cities metro.

Summer Artisan Home Tour opened the doors to extraordinary residences The 2026 Summer Artisan Home Tour once again gave Minnesotans a rare opportunity to step inside some of the region’s most distinctive residences, celebrating the craftsmanship, creativity, and innovation that define the Twin Cities’ custom homebuilding and remodeling industry. This summer’s tour featured 17 new and remodeled homes across the metro. Each home offered its own interpretation of exceptional living, with architecture, custom details, and spaces designed around homeowners’ lifestyles. The collection showcased the breadth of talent and expertise in Minnesota’s residential construction industry. Visitors experienced everything from striking new builds to thoughtfully transformed spaces, gathering ideas and inspiration while seeing firsthand the level of detail that distinguishes an Artisan home. The tour also provided an opportunity to connect with the builders, remodelers, and designers whose expertise brought these one-of-a-kind structures to life.

14 | HOUSING INDUSTRY NEWS

Special programming added another layer to the Artisan experience. The sold-out Summer Soirée event welcomed guests to the Swanson Homes project in Medina’s exclusive Deer Hill Preserve neighborhood. Additionally, the Artisan Home Tour hosted its signature Inside the Design event prior to the tour, where attendees heard from a few of the design teams behind the homes. The panel-style discussion offered insights into the thought process and planning that goes into an Artisan-caliber project. For participating builders and remodelers, the tour offered an opportunity to showcase the expertise, creativity, and attention to detail behind their work. For visitors, it offered inspiration, new ideas, and a chance to experience some of Minnesota’s most remarkable homes firsthand. With another successful summer tour complete, the Artisan Home Tour now looks ahead to its fall event, happening Oct. 9–25, when a new collection of exceptional homes will open for tourgoers to explore.

HUD representatives met with local builders, advocates, and state lawmakers to discuss housing issues in the region.

INDUSTRY IN ACTION

City of Dayton abandons moratorium push Public hearing not held as scheduled In late July, the Dayton City Council removed a proposed six-month housing moratorium from consideration after questions were raised about its legal basis. The proposed moratorium would have temporarily paused residential development while city officials examine staff workload and possible land use ordinance changes. Under Minnesota law, a land use moratorium can be enacted for several reasons—but staff workload is not one of those reasons. In an earlier planning commission meeting, developers raised concerns over the city crafting the moratorium to allow identified developments to proceed. Before the July 28 public hearing, Housing First Minnesota submitted a letter arguing that Minnesota law does not grant cities broad authority to impose development moratoria outside the limited circumstances authorized by state statute, specifically staff workload. The organization argued the proposal lacked a sufficient legal basis and warned that adopting the moratorium could expose the city to legal challenges. The proposal marked the latest example of local governments considering temporary development restrictions amid growth and infrastructure discussions. Housing industry groups and state lawmakers have raised concerns over cities imposing land use moratoriums in the middle of a housing shortage, arguing they delay housing production, increase costs, and worsen existing housing shortages. Earlier this year, the City of Lakeville enacted a one-year moratorium on housing, partly because state lawmakers pushed legislation to remove local barriers to development. As of publishing, the Lakeville moratorium is still in place.

The moratorium would have paused all residential development in the city.

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