If you build houses in Sioux Falls, you've probably felt it already. The city's latest building permit numbers say what a lot of contractors have been saying all year: apartments are going strong, and new single-family construction is slow.
According to SiouxFalls.Business, the city issued just over $90 million in building permits in September. That was a below-average month. Through the end of the third quarter, the city's total stands at $796.9 million. That compares with $1 billion at the same point last year and $801 million two years ago.
The city's building services team summed it up plainly: "The main story is new residential construction continues to be slow, while apartment construction continues to have another strong year."
Homes down, apartments up
The numbers back that up. New residential construction totals $137.1 million so far this year, down from $177.6 million a year ago and $181 million two years ago.
Single-family homes are something of a mixed picture. The city has permitted 298 so far, which SiouxFalls.Business reported is 11 more than last year but 127 fewer than in 2024. Either way, the count is well below where it was two years ago.
Townhomes have taken the biggest hit. Just 151 townhome units have been permitted this year, compared with 328 last year and 329 two years ago. That's more than a 50% drop.
Multifamily is the bright spot. The city has permitted 1,738 apartment units so far this year, up from 1,521 last year. That's still a bit short of the 1,806 units permitted two years ago, but it shows rental construction remains busy.
Remodeling is holding up, too. Residential remodeling permits total $70.5 million, up from $64.6 million last year and $69.3 million two years ago.
Senior living and a college addition
The biggest September projects show where the money is going. The largest project permitted last month was Emra Sioux Falls, a senior living project with 95 units at 7900 E. White Spruce Place, near Arrowhead Parkway and Six Mile Road. SiouxFalls.Business reported the project is on land owned by the Assam family.
The only other September project over $10 million was a $17.9 million addition to Southeast Technical College's Ed Wood Abdnor Center for welding and advanced manufacturing.
On the commercial side, new commercial construction stands at $385.4 million, down from $516.2 million last year and $409.2 million two years ago. Commercial additions and remodels total $203.9 million, compared with $268.1 million a year ago but well above the $141.5 million two years ago.
Put it together, and Sioux Falls is having a solid year by most measures, just well behind the $1 billion pace it had set at this point a year ago. The gap is mostly in commercial work and in for-sale housing. Apartments and remodeling are carrying a lot of the load, and both are running ahead of where they were at this point last year.
Affordability is part of the backdrop. South Dakota Searchlight reported this month that mortgage rates are above 7% and that the statewide median list price is about $375,000, up from about $240,000 five years ago. That is the same squeeze the state is trying to ease with its new Give Me Five down payment program for first-time buyers, which launches Nov. 2 and covers homes priced at $410,000 or less.
Why it matters for Contractors
For contractors, these numbers point to where the work is right now. If your business depends on new single-family homes or townhomes, this year has been tougher, and the townhome drop is especially steep. Contractors who can move between residential and multifamily work, or who do remodeling, have had more chances to stay busy.
Apartment jobs and senior living projects like the 95-unit Emra building bring steady work for framing, drywall, mechanical, electrical and finish trades. Remodeling, up more than $5 million from last year, is a reminder that homeowners are still spending on their houses.
With the fourth quarter and winter ahead, it will be worth watching whether new home permits pick up. The state's new down payment help for first-time buyers could give entry-level homes a lift. For now, the Sioux Falls market is being carried by rentals and remodels, and contractors who follow that work are in the best position heading into the new year.