Colorado Springs-area homebuilding slowed last month, though construction in 2020 continues to run ahead of last year’s pace even amid the pandemic that has battered local and national economies.
Homebuilders pulled 329 permits in May for the construction of single-family homes in El Paso County, a nearly 16% year-over-year decline, according to a report from the Pikes Peak Regional Building Department. The figure includes single-family detached homes, but not townhomes and condominiums.
Whether May’s drop in permits is the start of a trend related to the coronavirus pandemic or a statistical anomaly isn’t known.
On the one hand, the pandemic has led to thousands of local workers losing jobs; by late May, nearly 45,000 area residents had filed first-time unemployment insurance claims over a seven-week period. Some builders have said a construction slowdown is likely and could be felt more as the year goes on.
Then again, the decline in building permit numbers for May might result from a comparison against an unusually strong month a year ago; the permit total in May 2019 was the second highest since the start of last year and the fourth busiest month over the last five years.
Also, the pace of construction for some builders might have temporarily slowed and caused construction numbers to dip.
“We saw a little bit of a slipping in May, which may or may not be a result of COVID,” said Carrie Bartow, board president of the Housing & Building Association of Colorado Springs and a principal with the Springs office of a national professional services and accounting firm. “It may just be a product of where the builders were in their cycles.”
Year to date, building permit activity is up by almost 20% from a year ago — 1,729 single-family home permits issued during the first five months of 2020 compared with 1,443 during the same period last year, Regional Building Department figures show.
“That’s good,” Bartow said.
One positive for the local homebuilding industry has been a housing shortage that existed before the onset of the pandemic, Bartow said. In particular, the supply of homes on the resale side of the market was historically low, which had caused some buyers to turn to new homes.
“The demand for housing is still as strong as it was before COVID,” Bartow said.
Something else that can help the housing market: mortgage rates remain at rock-bottom levels — falling to an average of 3.15% nationally for a 30-year, fixed-rate loan, according to mortgage buyer Freddie Mac. That’s the lowest in the nearly 50 years that Freddie Mac has been tracking rates.
“What we’re hearing from our national association (National Association of Home Builders) is that builder confidence is up and they’re suggesting a strong recovery in the fourth quarter of 2020, which is great from a national perspective,” Bartow said. “We haven’t seen that much of a dip, obviously, here locally.”
The Springs’ homebuilding industry is a key part of the Pikes Peak region’s economy, employing thousands of people who work in the construction trades.