Colorado Springs-area home construction continued its recovery in 2013, as the pace of homebuilding climbed to its highest level in seven years.
Single-family homebuilding permits, a key measure of local construction activity, totaled 2,676 last year in El Paso County, a nearly 21 percent increase over 2012, according to a report issued Thursday by the Pikes Peak Regional Building Department.
Last year's total was the highest since 3,446 single-family home permits were issued in 2006.
For December, permits totaled 178, up 17.1 percent from the same month a year ago, the report showed. It was the first monthly increase since July of last year; construction had slowed the past few months as long-term mortgage rates rose above 4 percent.
Local home construction - which employs thousands of people and pumps millions into the economy and local government coffers - has gone through peaks and valleys over the last decade.
In 2005, a record 5,314 single-family permits were issued in El Paso County. But like other sectors of the economy, homebuilding was clobbered by the recession; in 2009, single-family permits plummeted to just 1,105.
From that point, the building industry began a slow rebound, which picked up steam in recent years as historically low mortgage rates, a pent-up demand on the part of buyers and a slowly improving economy all helped drive home construction.
But will the recovery continue in 2014?
Joe Loidolt, president of- Classic Communities and new board president of the Housing and Building Association of Colorado Springs, said he expects this year to be about the same or a little better than 2013.
The national economy has improved, the stock market is doing well and consumer confidence is on the upswing, he said. As a result, Colorado Springs is poised for a slow and steady increase in homebuilding this year - although that pace would accelerate if job growth improves, Loidolt said.
The effect that rising mortgage rates will have on homebuilding, however, remains an unknown.
Thirty-year, fixed-rate mortgages averaged 4.53 percent nationally last week, mortgage giant Freddie Mac said Thursday. In early 2013, rates were a full percentage point lower.
Even though higher rates caused a slowdown in homebuying during the past few months, consumers seem to have accepted that higher borrowing costs are here to stay. Classic, like other builders, saw improved buyer traffic in November and December, Loidolt said.
"Everybody kind of hit a little bit of a lull right after interest rates went up," he said. "Now, we're kind of back to normal, it feels like."
If rates continue to rise, and without more job growth, homebuilding could slow, Loidolt said. He added he wasn't sure at what point rising rates would discourage buying.
"If it goes up a little bit, we're probably OK and we're probably going to be very similar to where we are (in 2013)," Loidolt said. "If it goes up a lot, then obviously that changes everything."
Contact Rich Laden: 636-0228
Facebook Rich Laden