By Christopher Snowbeck, Pioneer Press, St. Paul, Minn.

Nov. 5--Homebuilders in the Twin Cities filed 53 percent more building permits for residential construction in October than during the same month last year -- the second consecutive month of year-over-year increases in the metro, according to numbers released Wednesday.

And a greater share of the October permits was for single-family construction.

Whereas builders last year filed 212 permits to build a total of 628 units, they filed 326 permits last month for 401 units, according to the monthly Keystone Report for the Builders Association of the Twin Cities. The report tracks permits in the 13-county metro area.

In September, builders broke a string of more than three years in which monthly totals for building permits were down in the Twin Cities on a year-over-year basis. The steady decline in permits has been a key indicator of weakness in the local housing market.

But the sector has showed signs of bottoming out this year as buyers responded to a combination of lower prices, lower mortgage rates and a federal tax credit for first-time purchasers. The tax credit is set to expire Nov. 30, but is on the verge of being extended until spring.

Builders like the idea.

"As home prices stabilize and families begin to feel better about investing in a home, now is not the time to put the brakes back on," Mike Swanson, president of the Builders Association of the Twin Cities, said in a statement. "Remember, this is not a bailout for builders, it's about fixing

the economy, which is directly linked to the declining value of housing."

The increase in building permits comes at a time when there's a shrinking inventory of new homes available in the Twin Cities, according to a separate report released by MetroStudy, a Houston-based company that tracks residential construction trends.

At the end of the third quarter, the inventory of new homes for sale in the 13-county metro area stood at 3,370 -- down about 33 percent from an inventory of 5,053 new homes during the third quarter of 2008.

"We've been on a decline of housing inventory basically since the beginning of 2006," said Ryan Jones, director of MetroStudy's local office in Plymouth.

There were 1,304 new home sales during the third quarter -- a decline of about 27 percent from 1,784 such sales during the third quarter of 2008, Jones said.

The number of new-home construction starts during the third quarter was 1,000, Jones said, which was down from 1,100 such starts during the third quarter of 2008.

As for permits in October, Shakopee led the metro in building activity with permits filed to build 56 units, followed by Blaine with 47 units permitted and Woodbury with 40. Lakeville saw 20 permits filed to build 20 units during the month.

The estimated value of all permits filed in October was nearly $92.7 million. Back in the housing market's boom days of 2005, builders in October filed permits for $287.7 million in residential construction.

Christopher Snowbeck can be reached at 651-228-5479.

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