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About Kooky and Shaka →Minneapolis permitted 300 homes in apartment buildings in 2025, according to an article published by the Federal Reserve Bank of Minneapolis on Wednesday 7 October 2026. The bank's analysts measure the fall in multifamily permitting at 91.6% between its 2022 peak and its 2025 trough, and report in the same article that the city's median rent reached a new high in August 2026.
The article is the latest reading of a set of indicators the bank built to follow the Minneapolis 2040 Plan, the land-use plan the city adopted in 2019 with the aim of making housing more affordable by encouraging more construction. Its title sums up the finding: stable rents, stalled development. It is written by Ben Horowitz, senior policy analyst, Libby Starling, senior community development advisor, and Maxine Xu, data scientist, all in the bank's Community Development and Engagement group.
Federal Reserve Bank of Minneapolis, article of 7 October 2026. Permit figures from the Metropolitan Council; median rent from Apartment List.
What the Minneapolis Fed measured
The bank does not judge the plan from a single number. Its Minneapolis Housing Indicators dashboard tracks 11 core indicators and monitors 29 more, and it sets the city against a comparison group of 126 similar cities. Those cities are weighted so that, taken together, they match the patterns Minneapolis showed before 2019. The idea is to ask what would probably have happened in a city like Minneapolis that did not adopt the plan.
The dashboard is refreshed every three years, and the article published on 7 October presents the 2026 refresh. The bank says it added two core indicators, a vacancy-rate indicator with its own comparison group, and a comparison group for permits in duplexes, triplexes and fourplexes. It also added a new test of statistical significance, a side-by-side view, and an inflation adjustment for the indicators that are expressed as prices.
Related readSingapore: Lucerne Grand 61% sold as The Serra Residences previewsThe authors are careful about what the comparison can prove. They write that the plan's effects are hard to separate from state and local policy, from the COVID-19 pandemic and from the civil unrest the city went through in 2020 and in 2026. The indicators show where Minneapolis parted from similar cities. They do not, on their own, say why.
One structural measure has barely moved. Single-family detached houses made up 40.7% of the city's housing stock in 2019 and 39.9% in 2024, the bank reports: a shift of 0.8 of a percentage point in five years.
From 4,646 units to 300
The permit figures tell the story of a boom followed by a near stop. From 2018 to 2022, the bank says, Minneapolis permitted more than 18,000 units in buildings of five or more units, the most of any five-year period in the city's recent history. The highest single year was 2019, with 4,646 units, and each of 2018, 2020, 2021 and 2022 stood above 3,000.
Then the count dropped. The city permitted 1,043 units in such buildings in 2023, 351 in 2024 and 300 in 2025. On the bank's figures, 2024 and 2025 each came to less than 10% of the 2022 total. The last year in which Minneapolis permitted as few as 300 multifamily units was 2008.
Federal Reserve Bank of Minneapolis, 7 October 2026, from Metropolitan Council permit data. The article gives 2018, 2020, 2021 and 2022 only as above 3,000 units each.
A slowdown in apartment building is not peculiar to Minneapolis, and the comparison group shows it. Permitting in the 126 cities fell 64.3% from its 2021 high to its 2024 low, then rose slightly in 2025. What sets Minneapolis apart is the depth of the fall and the absence of any recovery so far. The bank notes that the comparison group's weighted peak in 2021 was 17% above the Minneapolis peak of 2022, so the two started from broadly similar heights. By 2025 the comparison group was permitting five times as much multifamily housing as Minneapolis.
Related readUS residential construction spending rose 1.1% in August 2026Rents: lower than similar cities, and rising again
The plan's logic was that more homes would hold rents down, and on that side the bank's indicators are kinder to the city. From June 2022 to the end of 2025, the median rent on a new lease in the comparison group was consistently more than US$200 a month above the Minneapolis figure.
That advantage is shrinking. In the latest data the gap has narrowed to US$150. Between January 2025 and August 2026 the median rent in Minneapolis rose 8.9%, the bank reports, while the comparison group's rose 1.8%: a difference of 7.1 percentage points over that period.
Two data firms give the current level, each with its own measure. Apartment List puts the Minneapolis median rent at US$1,469 in August 2026, up 3% on a year earlier and a new high. CoStar's quarterly average rent reached US$1,528 in June 2026, also a new high, up 2.2% from June 2025. One is a median and the other an average, so the two are not expected to match.
Adjusted for inflation, the picture changes again. Expressed in January 2026 dollars, overall rent in Minneapolis fell from US$1,777 in January 2020 to US$1,436 in August 2026, a decline of nearly 20%. The comparison group's real rents fell by just over 10% over the same period. Rents in the city are at a record in the dollars tenants actually pay, and still well below their 2020 level once rising prices are taken into account.
Why developers say projects no longer work
To explain the stall, the authors interviewed developers in the summer of 2026. Their account, as the bank reports it, starts with something the plan got right. The developers said it made the rules clear and predictable. One of them estimated that each extra month spent on land-use approval for a larger building can add more than US$100,000 to its cost, which gives a sense of what predictability is worth.
Related readUS new-build homes: builder warranties and the federal rulesThe difficulty lies elsewhere. One developer told the authors that a project built in 2023 would cost 30% more to build today. Another said expenses had risen by 5% to 10% a year while rents stayed flat. A developer put current construction costs at about US$325,000 per unit.
Existing buildings, meanwhile, change hands for less than it would cost to build them again. The bank cites recent sales in two types of building.
| Building type | Recent sale price | Replacement cost |
|---|---|---|
| Steel-framed tower | About 300,000 | 400,000 to 500,000 |
| Wood-framed, 5 to 7 storeys | About 250,000 | About 300,000 |
Federal Reserve Bank of Minneapolis, 7 October 2026, from interviews with developers in summer 2026. Estimates, not official statistics.
On those estimates, a steel-framed tower sells for US$100,000 to US$200,000 a unit less than it would cost to replace, and a wood-framed mid-rise for about US$50,000 less. An investor who can buy at that discount has little reason to pay full price to build.
Demand has also softened. The bank notes that Minneapolis added about 5,000 residents in the half-decade since 2020, against more than 47,000 between 2010 and 2020.
The city rules developers point to
The developers also named requirements that are specific to Minneapolis: inclusionary zoning, which obliges a share of the units in a new building to be let at restricted rents; first-floor retail requirements; expanded eviction protections; and minimum building heights. The discussion of rent stabilisation in the city reportedly dampened investor sentiment as well.
The article works through inclusionary zoning in figures. A two-bedroom unit that must be affordable to a household at 60% of area median income can rent for no more than US$1,776 a month, utilities included. A developer estimated that a rent at that level supports between US$150,000 and US$175,000 of construction cost per unit. Set against a cost of about US$325,000, that leaves a gap of at least US$150,000 on each restricted unit. In a 100-unit building where 8% of the units are restricted, eight units carry that gap, and the total passes US$1 million.
Related readVictoria fast-tracks 15,000 homes while completions rise by sevenThe city's own research did not find that inclusionary zoning stops construction
The Minneapolis Fed reports the developers' estimates and, alongside them, that research carried out for the city on its inclusionary zoning policy did not find that it blocks new building. The developers' figures are their own estimates, given in interviews.
The authors do not settle the question. They set the developers' account of costs and local requirements beside the city's research and leave both on the record.
What the figures mean for affordability
For tenants, the bank's affordability measures are mixed. The 2026 rent limit for a one-bedroom unit at 60% of area median income is US$1,479 a month. Apartment List's median rent for a one-bedroom in Minneapolis in August 2026 was US$1,326, which is US$153 below that limit. The typical one-bedroom on the open market, in other words, already rents for less than the ceiling set for income-restricted housing.
That does not mean renting is comfortable. More than four in ten renting households in Minneapolis pay over 30% of their income on housing, the bank reports.
The plan's most discussed change, allowing small multi-unit buildings on land once reserved for single houses, has produced modest numbers. From 2020 to 2025 the city permitted 317 units in duplexes, triplexes and fourplexes, in 106 buildings. Of those buildings, 47 stand on parcels that previously allowed only single-family homes. The bank calculates that the 317 units are 2.4 units more than the scaled comparison group produced, which is to say almost no difference, and that they amount to about 2% of the 12,335 multifamily units permitted in the city in those years.
How to read the data, and what comes next
Readers who know other housing statistics will find that some of the bank's figures do not match them, and the article explains why. Its rent series now come from Apartment List and CoStar rather than from the American Community Survey. Its permit counts come from the Metropolitan Council and differ from the Census Bureau's Building Permits Survey. A figure quoted from this article should be compared with others from the same source.
Some details are not in the article. It does not give the exact number of units permitted in 2022, the year from which the 91.6% fall is measured, beyond saying that it was above 3,000. It does not name the 126 comparison cities.
The authors say they will keep updating the dashboard through the city's next comprehensive plan, the 2050 Plan, which they expect later this decade; no date is given. Their conclusion for the present is conditional. For new development to make financial sense without additional subsidy, they write, rents would have to rise or costs would have to fall substantially. Until one of those happens, the city's lower rents rest on the more than 18,000 units permitted between 2018 and 2022, and on little that has been approved since.
Kooky, from Shaka
Kooky edits Agents Estate and builds Shaka, the payment router he made for real estate professionals. One payment comes in, and every agent, agency and party in the deal receives their signed share on closing date.
