Colorado Springs-area home sales rose in February for the first time in nearly two years, while the pace of home construction also jumped last month — encouraging signs for the local housing market that’s been battered by higher mortgage rates.

The Pikes Peak Association of Realtors’ latest market trends report shows home sales totaled 792 in February, a 1.8% increase over the 778 sales during the same month last year and the first year-over-year gain since May 2022.

Home prices also were on the upswing; the median price of homes that sold in February climbed to $455,950, a 3.6% increase over the same month last year, according to the Realtors Association report, which tracks transactions handled by its members. Year-over-year prices now have increased for six straight months after seven consecutive months of declines.

The supply of homes for sale, meanwhile, also rose in February — totaling 1,830 or nearly 27% higher than a year earlier, the Realtors Association’s report showed. Based on the number of listings and the recent pace of sales, the Colorado Springs area had a 2.3-month supply of homes on the market in February, compared with 1.9 months in February 2022.

Thirty-year, fixed-rate mortgages began 2022 around 3% and more than doubled to more than 6% by the end of that year, which priced many buyers out of the market and triggering a slowdown in selling and construction over the last 20 months or so.

Last week, long-term rates averaged 6.94% nationally, which was the highest since mid-December, according to mortgage buyer Freddie Mac.

But before that recent surge, long-term mortgage rates had ticked downward to roughly the mid 6% neighborhood in the first few weeks of 2024, which spurred some buyers to jump back into the market and helped drive February’s increase in sales, said Dean Weissman, a real estate agent and part-owner of The Platinum Group Realtors in Colorado Springs.

“You had people that saw some light at the end of the tunnel,” he said.

At the same time, some owners who had resisted selling their homes because they didn’t want to give up their low mortgages and take on a much higher rate, went ahead and listed their properties after borrowing costs dipped, Weissman said.

That helped boost the supply of homes on the market, he said. And an increased inventory provides more choices for buyers, which leads to more sales.

Homes that were priced appropriately for the market and in good condition even attracted multiple offers in some cases during February, especially in the $200,000-to-$700,000 range where buyers depended on the dip in mortgages rates to afford their purchases, Weissman said.

“I think you bulk all that up, and it’s kind of like this couple weeks of a perfect storm that just kind of came together real nicely,” Weissman said of February’s increases in sales, prices and inventory.

On the new construction side of the Springs-area housing market, builders pulled 226 permits in February for the construction of single-family detached homes, a 61.4% jump from the 140 permits pulled during the same month last year, according to a Pikes Peak Regional Building Department report.

February’s permits were the most since 251 in May 2023 (though a change in construction codes prompted a rush by builders in June 2023, who pulled 500 permits that month in what industry experts considered an aberration).

The dip in mortgage rates also helped spur buyer interest in new homes, said Thomas Garmong, this year’s board president of the Housing & Building Association of Colorado Springs and market leader for the Colorado Springs division of Oakwood Homes, the Denver-based builder with a large presence in El Paso County.

“In general, a lot of buyers have been sitting on the sidelines due to the interest rates being so high,” Garmong said. “The interest rates are still high, but they’ve come down from some of the peaks of where they were in 2023 and I think that pent-up demand, these folks that have just been sitting there on the sidelines, any drop in the rates has caused them to get back into the market.

“We’ve seen a lot more traffic, a lot more buyers are out looking,” he added. “I think that minimal drop in the rates have really spurred them to action now.”

Since borrowing costs jumped in 2022, several area builders have offered mortgage rate buydowns — programs that effectively lower borrowing costs for buyers during the first few years of a loan. Those incentives also have helped attract new home buyers, Garmong said.

“Builders have gotten very aggressive on those incentives, which again I think is drawing some of those buyers and getting them off the fence,” he said. “It actually is a really good time to buy a home right now.”

If long-term mortgage rates fall below 6% as many housing industry experts expect at some point this year, the Colorado Springs-area housing market likely will see a surge in buying, selling and inventory, Weissman predicted.

That rebound, however, might be bad news for buyers, who could find themselves back in the midst of a frenzied housing market and bidding wars as they compete for houses, he said.

“We’re already seeing it … The last six offers that we’ve written on properties, we were competing 100% of the time,” Weissman said. “There was more than one offer on the property.”

Garmong is optimistic the new home market’s recent uptick will continue over the next few months and into the summer, though he said the fall elections could lead to a pause in that activity.

“As we get into the election cycle toward the end of the year, I’m a little bit worried about what that is going to do to the market,” he said. “I’m just going off of the historical cycle. Usually, in an election year, around election time … that buyer sentiment will lessen. People are unsure of what’s going to happen and so they’ll typically wait on the sidelines to see what the results are going to be.”

Colorado Springs-area home sales rose by nearly 2% in February, the first year-over-year increase in sales since May 2022, a new Pikes Peak Association of Realtors report shows.

The GAZETTE FILE