Housing Supply, Sales Rise ; Construction Declines; Prices Continue Increasing

Jun 05, 04:23 PM

Current Headlines: By RICH LADEN THE GAZETTE

Housing continued its slowdown last month in the Pikes Peak region, as new construction fell for the sixth straight month and the supply of homes for sale rose sharply.

Yet not all the news was bad. Home sales remained solid and prices increased, which prompted some real estate experts to say they're not fretting a market collapse.

Building permits for singlefamily homes in El Paso County, a strong indicator of the housing industry's strength, totaled 346 in May, down 25.3 percent from the same month in 2005, according to figures released Thursday by the Pikes Peak Regional Building Department.

For the first five months of this year, singlefamily permits totaled 1,883 or 21.1 percent below the same period last year.

Economists and real estate experts have blamed rising mortgage rates for the slowdown in permits.

At the same time, this year's numbers have a tough act to follow. They're being compared with record totals in 2005, and economists had predicted that home construction would be hard-pressed to match last year's pace.

The supply of homes listed for sale through the Pikes Peak Association of Realtors jumped to 5,260 in May, a 23.6 percent increase over the same month last year.

The total was the highest since August 1989 but far short of the record 6,236 in June 1988 -- when about 150,000 fewer people lived in the area and the pool of potential home buyers was much smaller.

While May's housing supply increased, so did demand. Last month's sales totaled 1,264, a 3.5 percent rise over a year ago.

But even as the supply

i nc r e a s e d, prices jumped, too -- seemingly defying the laws of supply and demand.

The median price for homes sold in May increased to $220,000 or 8.9 percent higher than the same month in 2005. The median is the midpoint of all prices for homes sold, with half of May's sales being more than $220,000 and the other half being less.

The Realtors Association figures on supply and prices include homes sold mostly in El Paso and Teller counties and reflect only homes sold by real estate agents.

The Office of Federal Housing Enterprise Oversight, meanwhile, released figures Thursday showing Colorado Springs-area housing prices rose 7.03 percent for the 12 month-period that ended in March compared with the previous 12-month period. In Colorado, the increase was second only to that in Grand Junction and ahead of those in Boulder, Denver-Aurora, Fort Collins-Loveland, Greeley and Pueblo.

Springs real estate agents Bill Hurt, president of ERA Shields Real Estate, and Doug Barber, president of the Rawhide Group, said they had no explanation for the big jump in local home listings.

However, Hurt suggested that sales of some pricey homes in May might have helped push up last month's overall median price.

He added that he was encouraged sales were up from a year ago and doesn't expect prices to drop.

An increased supply of homes on the market, however, means sellers must be careful not to overprice their properties, Hurt said.

"What many people fail to recognize is that they need to come out of the box right in this kind of market because they may not get a second shot," Hurt said. "People may not come back and look at a home a second time.

"They really need to be realistic in their expectations in this kind of market," Hurt said.

But homes that are fairly priced and in good condition will continue to attract buyers, he said.

As the housing market sent mixed messages, foreclosures in El Paso County in May jumped to 256, a 27.3 percent increase over the same month last year according to the El Paso County Public Trustee's Office.

May's total was the biggest single-month tally since August 1989, although it was well short of the one-month record of of 353 in March 1988.

Whether increased numbers of foreclosures wind up hurting the housing market, however, seems unlikely for now. Of the number of homes added to May's sale listings, only 5 percent were houses that had been foreclosed on, according to the Trustee's Office.

CONTACT THE WRITER: 636-0228 or rich.laden@gazette.com

FACT

The total number of local homes for sale (5,260) was the highest since August 1989 but far short of the record 6,236 in June 1988.

(c) 2006 Gazette, The; Colorado Springs, Colo.. Provided by ProQuest Information and Learning. All rights Reserved.