The pace of homebuilding dropped dramatically in September from a year before, with a nearly 63% drop in permits issued for single-family homes in El Paso County, the Pikes Peak Regional Building Department reported Monday.
Those permits — for the construction of single-family detached homes and excluding townhomes, condos and apartments — fell in September to 134 from 360 during the same month last year.
That's because rising long-term mortgage rates are slowing the pace at which new homes are being built, a local industry expert said.
The average on the key 30-year mortgage rate hit 6.70% last week, mortgage buyer Freddic Mac reported — more than double the rate a year before. Mortgage rates have been climbing as the Federal Reserve has been vigorously raising borrowing rates in its fight against inflation.
"The buying public is in shock," Mark Long, president and CEO of Vanguard Homes in Colorado Springs, said. "... It just knocks a lot of buyers out of the market."
Long said buyers aren't purchasing homes right now unless they have a "super bona fide need."
Local homebuilders in recent months have also cited climbing new-home prices, the result of soaring costs for construction materials, fuel and more, as a reason for the slowdown. Year to date, single-family permits totaled 2,738, down from 3,525 in the same period last year.
"The pendulum has already swung and will hopefully be swinging back," Long said.
Single-family home permits did bump up in September from August's tally of 110 permits, which was the lowest since December 2018.
Long expects to see several more months with reported numbers similar to that of August and September.
"I doubt you're gonna see any real change in the market until first of the year at the earliest," Long said.