Local home construction declined in September for the second straight month, another sign that higher mortgage rates have taken some steam out of the Colorado Springs-area housing market.
Building permits issued for construction of single-family homes in the Springs and El Paso County totaled 163 last month, a 16 percent drop from September 2012, according to a report Tuesday by the Pikes Peak Regional Building Department.
September's drop followed a 6 percent, year-over-year decline in August.
The two-month slowdown follows 19 consecutive months of increases in home construction, and coincides with an uptick this summer in mortgage rates.
Nationally, 30-year, fixed-rate mortgages have been above 4 percent since late June, and were as high as 4.58 percent in late August, according to mortgage buyer Freddie Mac. Last week, rates averaged 4.32 percent nationally.
Rising interest rates "are the primary reason" for the slowdown in single-family home construction, said John Bissett, owner of JM Weston Homes and board president of the Housing and Building Association of Colorado Springs.
Also, some of the pent-up demand among buyers has waned, Bissett said. New home buyers had been on the sidelines during the height of the recession; when the economy improved, they jumped into the market, which helped drive homebuilding.
Despite the slowdown in building, Bissett said there's no cause for panic. He expects the pace of homebuilding to remain strong, but construction will take place on a more even keel, without the large increases the building industry saw during much of last year and the first half of 2013.
"We saw some pretty staggering increases over the last 18 months, which, mathematically, just aren't sustainable," Bissett said. Also, a more consistent pace will help builders and subcontractors, who can better plan their construction schedules, he said.
Even as monthly permits declined in August and September, the year-to-date pace of homebuilding in Colorado Springs and El Paso County continues to run ahead of the same period last year.
Through the first nine months of 2013, single-family homebuilding permits totaled 2,158, a 30 percent increase over the same time frame in 2012. Permits totaled 2,216 for all of 2012.
Of the 2,158 single-family home permits issued through the first nine months of 2013, 172 or 8 percent were for Mountain Shadows and Black Forest homes being rebuilt in the wake of last year's Waldo Canyon fire and this year's Black Forest fire, according to Regional Building records.
Even without those permits, the area is on track to eclipse the pace of homebuilding last year.
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