Colorado Springs-area homebuilding and prices on the resale side of the local housing market both jumped in May — trends that indicate, in part, that some on-the-fence buyers no longer are waiting for mortgage rates to fall and are taking the plunge on a home.

Permits pulled for the construction of single-family, detached homes totaled 330 in May, a nearly one-third percentage increase over the same month last year, according to a new Pikes Peak Regional Building Department report. That total rises to 372 if townhomes and duplexes are included.

May was the 10th consecutive month of year-over-year gains in single-family, detached permits, Regional Building Department figures show. Last month’s total also was the highest since 404 permits in June 2022 (500 permits were issued in June 2023, though that month’s numbers were inflated by the rush to pull permits in advance of a building code change).

Through the first five months of 2024, single-family detached building permits totaled 1,221, up 30.7% from the same period in 2023.

A pent-up demand for housing on the part of buyers who’ve grown weary of waiting for mortgage rates to drop is one factor that’s driven many to move ahead with home purchases, said Thomas Garmong, board president of the Housing & Building Association of Colorado Springs and market leader for the Colorado Springs division of Denver-based Oakwood Homes.

Thirty-year, fixed-rate mortgages, which are the most popular among buyers, were in the neighborhood of 3% in early 2022.

But after the Federal Reserve hiked interest rates in an effort to tamp down inflation, mortgage rates zoomed and have remained stubbornly in the mid-to-high 6% and 7% range for nearly two years, which priced many buyers out of the market.

Last week, long-term rates averaged 7.03% nationally, according to mortgage buyer Freddie Mac.

“There’s a significant demand for housing and I think people were initially hesitant and waited on the sidelines for interest rates to improve,” Garmong said Wednesday.

“I believe now they’re looking forward, saying, OK, maybe this is a new normal, maybe we just need to accept interest rates where they’re at and get off the fence essentially to meet their housing needs.”

Mortgage buydowns offered by Oakwood and other major builders also have helped boost the pace of construction, Garmong said. Buydown programs effectively lower borrowing costs and mortgage payments during the first few years of a loan and serve as an incentive for buyers to get them in the door, he said.

“While the interest rate might be 7%, you can buy a home today and have your builder buy that rate down in the 6s or the 5s,” Garmong said. “I think those incentive actions have spurred people to buy a home and to move forward with that home purchase because, at the end of the day, they need housing.”

A new job, marriage and other life changes continue to drive that need, he added.

“People are still having children, they’re moving for jobs, they’re getting married, starting families, getting divorced, downsizing as they age into retirement,” Garmong said.

“All of those life events are happening regardless of what the interest rate is and I think there’s an acceptance of, ‘I still need this change in housing to meet my living needs.’”

Meanwhile, a Pikes Peak Association of Realtors market trends report released this week showed the median price for all homes that were sold in May by real estate agents jumped to a record high of $499,000, a 5.1% increase over the same month last year.

It was the ninth straight year-over-year increase in monthly prices, which followed seven consecutive monthly declines.

Home sales in May fell 8.1% to 1,142 when compared with last year, while the supply of properties for sale totaled 2,645, a 51.1% increase and the most for any month since an identical number of listings in October 2022.

The record-setting median price in May seems at odds with the reduced number of sales and jump in inventory.

One possible reason for the increase, however, might be that some buyers who’ve delayed purchases have accepted that interest rates haven’t fallen as industry experts had predicted and so they’re moving forward, much like new homebuyers, said Rick Van Wieren, a real estate agent with Re/Max Properties in Colorado Springs.

“It’s kind of like saying, ‘I’ll take a walk when there’s no wind or something,’” Van Wieren said. “It’s like, well, that day’s never coming. So, I better get outside and get some exercise. And the same is true with housing. At some point, people run out of lease space.”

Other factors also might have contributed to May’s record high median home price, he said.

New home prices, which are tied to the cost of land, labor and construction materials, can pull up existing home prices, Van Wieren said.

A recent series of job announcements by the Colorado Springs Chamber of Commerce & EDC include companies that have said they’re hiring highly paid aerospace, defense and tech employees. Their home purchases are likely to include higher-end properties, which help propel the area’s overall sales price in a given month, Van Wieren said.

“Some of these space guys and high-tech guys that are coming in; they’re making decent money,” he said. “And so they tend to kind of add a little fuel to the upper end (of the market).”

On the lower end of the market, some homeowners aren’t willing to sell for less than what they need to buy another home, Van Wieren said. As a result, they’re holding out for top dollar, which also might have helped push last month’s median price to a record high.

“Even at the lower end, people are not just going to give them (houses) away just because there’s more of them on the market,” he said.

Also, in certain segments of the housing market, Van Wieren said, some houses that are in prime condition, in desirable neighborhoods and priced right when compared with other properties are drawing multiple offers and receiving bids above the seller’s asking price — trends that were common when mortgage rates were 3%.

“You add all that together and that’s why prices tend to go up,” he said.