The pace of Colorado Springs-area home construction so far in 2022 is off to one of its best starts in the last 20 years.
In the first quarter, the Pikes Peak Regional Building Department issued 1,159 permits for the construction of single-family homes in El Paso County, a report from the city-county agency shows.
The figure includes permits for single-family detached homes, but not townhomes, duplexes, apartments and other dwellings.
On the one hand, the first-quarter permit total fell 16.4% when compared with the same period in 2021.
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Yet, this year’s single-family home permit total for the first quarter ranked as the third highest for any similar period since 2003, Regional Building reports and Gazette historical data show.
It trailed only the 1,387 permits issued in the first quarter of last year and the 1,393 issued in the first quarter of 2005, which was a record year for single-family building permits.
In general, the robust permit activity so far in 2022 is a sign of continued strength in the homebuilding industry and an overall demand for housing in Colorado Springs and the Pikes Peak region, some homebuilders say.
Not only is the area’s population booming, but Colorado Springs’ desirability as a place to live has been recognized over the past several years by U.S. News & World Report.
Last week, the Springs won a ninth-place rating from the Milken Institute in the California think tank’s annual list of best cities based on economic performance.
“We just still have a strong, unmet need for housing in our area,” said Ed Gonzalez, vice president and co-owner of Campbell Homes, a Colorado Springs builder for nearly 60 years.
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That demand for new housing slowed at the end of last year as the market “took a breather” and builders saw a sharp decrease in the amount of traffic among potential homebuyers, he said.
Since mid-January of this year, however, buyer traffic has picked up and Campbell Homes saw an increase in sales and signed contracts over the last eight weeks, Gonzalez said.
“The breather can only last so long,” he said. “People still need to buy either new homes or resale homes. It just took a breather for a little bit and it picked right back up to where it needed to be.
“It’s strong for us,” Gonzalez added of sales at Campbell Homes. “And when I talk with other builders, they’re seeing the same thing that we’re seeing. Their sales are strong as well. All of us saw a drop in traffic late last year, but it has picked back up.”
Not only are more people living in Colorado Springs, but a historically low inventory of homes available for sale on the resale side of the market has prompted many buyers to consider new homes, Gonzalez said.
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Even as long-term mortgage rates have risen in recent weeks, the increases haven’t significantly reduced buyers’ appetite for new homes, he said.
A year ago, 30-year, fixed rate mortgage rates averaged 3.18% nationally, according to mortgage buyer Freddie Mac. Last week, 30-year, fixed-rate mortgages averaged 4.67%.
“That is still an incredibly low rate, based on historical averages,” Gonzalez said.
And while supply chain woes have led to delays in obtaining construction materials, windows, appliances and other items, those problems aren’t stopping homebuilding, he said.
“They haven’t gotten any better, but they haven’t gotten any worse,” Gonzalez said of supply chain problems. “That’s the good and the bad of it. It’s still going to be something we’re going to be fighting for the vast majority of this year.”
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The homebuilding industry has a been key cog in Colorado Springs’ economy for decades. As a result, economists and city government officials pay close attention to the pace of home construction.
The industry employs thousands of carpenters, drywallers, electricians and other workers, whose paychecks help pump money into the economy when they buy cars, TVs, appliances and the like.
The Springs and other local governments, meanwhile, levy a sales tax on the purchase of building materials that raises millions a year to pay for roads, public safety and other basic services.