Simplified: The City of Sioux Falls is seeing fewer builders putting up single-family homes and more opting for apartments or commercial properties, according to building permit data for the first half of the year.

Why it matters

  • Sioux Falls has seen record growth the last few years, with more than $1 billion in building permit valuation for each of the last two years – in fact, this time last year, the city had already surpassed $1 billion in permits.
  • This year, that growth appears to be leveling off with just over $645 million. It's still slightly ahead of where the city was in July 2021, but the big difference this year is a significant drop in new residential permits.
  • Planning Director Jeff Eckhoff attributes the decline in single-family homes to rising interest rates paired with higher construction costs. But when it comes to apartments, builders keep on building.
"It's just the demand," Eckhoff said, noting that apartment occupancy rates have been very high – up to 90% – in Sioux Falls as more and more people move to town.

Tell me more about the permit data this year

Overall, the biggest driver of permit valuation is new commercial properties, and close to half of the new commercial permits are for apartments.

  • Even still, the total housing units added by the permits so far this year are behind where they were for the last two years.
  • This time last year, there were more than 500 permits for new single-family homes. Today, there are about 235.

The city is also seeing more people filing for permits to remodel or add on to existing homes.

"It's just kind of a chain reaction," Eckhoff said. "(With rising interest rates) not only are people not buying, but they aren't selling their homes either."

What happens next?

If history is any indicator, it could be another $1 billion year for Sioux Falls, but it's too soon to tell. That's only if permits in the second half of the year keep pace with where they have through July.