The pace of Colorado Springs-area home construction last year climbed to its highest level in a decade, and builders expect the trend to continue in 2017.
Permits issued to builders for the construction of single-family homes in El Paso County - one measure of the housing market's health - totaled 3,237 in 2016, according to a report Tuesday by the Pikes Peak Regional Building Department.
Last year's permit total increased a little more than 18 percent over 2015, and was the most for any year since 3,446 single-family permits were issued in 2006, Regional Building figures show.
Meanwhile, December's total of 220 permits rose nearly 30 percent over the same month in 2015.
"There's still a demand for housing," said Mark Long, board president of the Housing and Building Association of Colorado Springs and owner of Springs-based Vanguard Homes. "You need only look at the (average) days on the market for the resale product to kind of figure that out."
Builders say several factors drove the market in 2016: A stronger economy in the Pikes Peak region, where the unemployment rate fell to a nine-month low of 3.5 percent in November; improved consumer confidence; and low mortgage rates, even though they've ticked upward in recent weeks and now top 4 percent for long-term loans.
In 2017, however, some builders say they expect more job announcements will help drive the demand for housing, which will result in a similar number of single-family building permits for the year. At the same time, Donald Trump's election as president appears to have bolstered consumer confidence and spending, which already were showing strength, Long said.
"I think all the macro economic forces are aligned for us to have at least a repeat of 2016, if not a little bit better," Long said.
Nevertheless, will rising mortgage rates slow the market? Last week, 30-year, fixed-rate loans averaged 4.32 percent nationally - highest since April 2014, according to mortgage buyer Freddie Mac. Long-term mortgages also have risen for nine straight weeks.
"We know interest rates are going to creep up a little bit, but as long as they don't creep up too much - which no one's expecting - we should be OK," said Joe Loidolt, who heads homebuilding for Classic Cos., the longtime Springs builder.
An increase of 2 percentage points over the course of 2017 probably would slow the market, Loidolt said. But if rates don't rise by more than 1 percentage point, homebuilding should remain strong, he said.
"We've got a lot of stuff that's countering that," Loidolt said of rising rates. "We've got good job growth and it seems that's going to continue through 2017. Overall buyer sentiment is pretty good right now. So those are going to offset interest rates moving up a little bit. That's why we're planning (this year) being pretty similar to 2016."
And even as rates have surpassed 4 percent, they remain historically low and offer buyers a great opportunity, Long said.
"People need to get past the sticker shock of seeing 4.32 (percent) vs. 3.78 (percent)," he said. "Look at what that will buy you. Your money still goes quite a long ways."
Contact Rich Laden: 636-0228
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