Region’s housing market still soft

Home sales declined last month around the Pikes Peak region, although real estate agents remain optimistic that activity will pick up as spring approaches.

Single-family home sales fell nearly 11 percent in February when compared with the same month a year ago, according to the Pikes Peak Association of Realtors.

As sales slid, the supply of homes on the market surged by almost 25 percent in February from a year ago.

Despite a larger supply and reduced demand, homes that did sell fetched higher prices; the median price for homes sold in February rose 4.9 percent to $214,950.

The numbers reflect home sales and listings handled by Realtors Association members mostly in El Paso and Teller counties and don’t include homes being marketed by owners.

The area’s housing market enjoyed record sales in 2004 and 2005, but took a step backward in 2006 when sales declined and inventories rose.

Real estate industry members and economists have said the current market is a victim of past success. Low mortgage rates lured many people to buy homes in 2004 and 2005, but strong sales in those years drained the pool of buyers in 2006 and so far into 2007, which has led to a softer housing market.

Another problem last year: Speculative homes — those without buyers — were constructed by builders and competed with the resale market.

But home builders have slowed construction of speculative homes, which should help cut inventories and make resales more attractive to buyers, said Wynne Palermo, owner of Wynne Realty Ltd. in Colorado Springs.

“It bodes well for the resale market,” she said.

At the same time, mortgage rates remain relatively low; last week, they averaged 6.18 percent nationally for a 30-year, fixed-rate loan, according to mortgage giant Freddie Mac.

Combine low borrowing rates with an ample supply, and intelligent buyers will have plenty of choices for quality homes, which should help boost sales as the year goes on, said Ben Day, branch manager of ERA Shields Real Estate’s InterQuest office in Colorado Springs.

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