Home construction in the Colorado Springs area fell 3.9 percent in January compared with the same month a year ago - the fifth year-over-year decline in the past six months, according to a report issued Monday by the Pikes Peak Regional Building Department.
Nevertheless, the 171 permits issued last month for construction of detached single-family homes is the second highest for any January since 2007 and was down just seven permits from both the previous month and the same month a year earlier.
The 2,676 single-family permits issued last year were most for any year since 2006, but housing construction slowed in the second half of the year as interest rates for 30-year mortgages rose above 4 percent last summer. Rates on 30-year loans averaged 4.32 percent last week.
The recent slowdown doesn't concern local economic Tom Binnings.
"Builders are carrying a little more inventory coming into this year, and as a result, the year is off to a slow start," said Binnings, a senior partner with Summit Economics LLC, a local economic research and consulting firm. "Demand has been a little tempered by higher interest rates, but I expect this year to be similar to last year as long as rates don't move above 5 percent. We are just getting back to a normal interest rate environment. Builders are just waiting to see how it pans out."
The area's housing construction industry, which employs thousands of people and generates millions of dollars in sales and use tax revenue for local governments, is a key barometer of the local economy. The industry set records in 2005 before declining sharply during the recession. Housing construction recovered in the past few years, increasing for 19 consecutive months ending in July amid an improving local economy, historically low mortgage rates and pent-up demand for new homes.
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