Local homebuilding rose last month, while foreclosures fell - more signs that the Pikes Peak region's single-family housing market continues to rebound from the downturn that began six to seven years ago.
The number of building permits issued for the construction of single-family homes in Colorado Springs and El Paso County totaled 266 in July, a nearly 38 percent increase over the same month last year, according to a report Thursday by the Pikes Peak Regional Building Department. Permit numbers have increased for 19 straight months on a year-over-year basis. For the first seven months of the year, single-family home building permits totaled 1,758, up almost 45 percent over the same period in 2012.
Up to now, homebuilders have credited the recovery to historically low mortgage rates, an improving economy and pent-up demand on the part of buyers who had been on the sidelines over the last several years.
Will the trend continue?
Nationally, 30-year, fixed-rate mortgages averaged 4.39 percent - up from 4.31 percent last week and a percentage point higher than in early May, according to a report Thursday by mortgage buyer Freddie Mac.
John Bissett, board president of the Housing and Building Association of Colorado Springs and head of JM Weston Homes, said he and other builders are beginning to see some fallout from the rising rates.
Some buyers who could have afforded a monthly payment when mortgage rates were below 4 percent now can't obtain a loan and are backing off, Bissett said.
"An interest rate increase of 1 percent will affect the amount of monthly payment that the buyer can qualify for," Bissett said. "When that payment goes up, it knocks some people that were on the fence - under much more stringent lending guidelines today than six years ago - it knocks them out of the game."
Still, Bissett said he expects the homebuilding momentum to continue - just not at the same pace.
"The rise in interest rates is going to temper the recovery to some degree," he said. "The question is, how much will it temper it?"
Foreclosure filings in El Paso County, meanwhile, totaled 166 in July, a 47.8 percent decline from the same month a year ago, a report by the El Paso County Trustee's Office showed.
Year to date, foreclosure filings totaled 1,215, down nearly 41 percent from the same period in 2012.
Filings are the start of the legal process that can lead to the loss of a residential or commercial property at a Public Trustee's auction.
In his report, Public Trustee Tom Mowle estimates that foreclosure filings will total 2,069 for the year, which would be the fewest in any year since 2003.
Foreclosure filings had soared in recent years because of the recession, a housing downturn and too many loans given to borrowers with poor credit histories. Foreclosures in El Paso County hit a record of 5,288 in 2009.
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