AURORA | New home construction — commonly a major indicator of the housing market’s health — dipped around the country last month, according to a federal report.
But while the Commerce Department report said housing starts dipped 11 percent, and experts said it could be a sign of a cooling market, Aurora bucked the trend, and locals say the city’s market is still plenty hot.
According to the Commerce report, housing starts — both houses and apartments— fell last month 11 percent to a seasonally adjusted annual rate of 1.06 million homes.
Single-family house construction declined 2.4 percent. Last month’s drop mostly stemmed from a 25.5-percent slide in the volatile multi-family category that includes apartments, a sector that had posted a sharp increase in September. The government also revised downward overall housing starts in September and August.
In Aurora, apartment construction has been non-existent this year, with zero permits issued in 2015 for multi-family units, according to the city building department’s monthly report.
But single-family home construction in Aurora was up in October compared to a year ago, with 71 permits issued compared to 69 a year ago. And for the year, the city has issued 855 permits for new homes, compared to 716 during the same stretch in 2014. In all, the new homes this year are worth $216 million.
Single-family starts were also up sharply in Aurora in September, when the city issued 99 permits, compared to 45 in September 2014.
Sunny Banka, chairwoman of the Aurora Association of Realtors board of directors, said she isn’t surprised to see Aurora’s housing market performing better than the national average.
“We are still one of the hottest markets in the country,” she said.
But, Banka said, the market has cooled some. A few weeks ago she said she put a home on the market for $266,000 and had seven offers almost immediately. A few months ago that property may have received more than 25, she said.
“It’s just a more mild insanity,” she said.
The market is especially strong for homes valued at less than $300,000, she said, because low interest rates mean shoppers can often buy those homes and pay less in mortgage payments than they pay in rent.
Even with the national data showing housing starts slipping, many analysts see the housing market as expanding despite the recent gyrations.
“The trend here is still up nicely from last year,” said Stephen Phillips, president of Berkshire Hathaway HomeServices, who added that the housing starts data is “one of the most volatile and often revised statistics we see in the industry.”
Home construction has climbed 10 percent year-to-date as solid levels of hiring have improved consumer confidence and encouraged more people to buy houses or move to new apartment complexes.
The additional construction marked a turnaround for a real estate sector that had been among the weakest pieces of the recovery from the Great Recession.
Yet the market’s upward trajectory now shows some signs of possibly stalling as rising prices, tight inventories and the economic uncertainty reflected in the stock market have sidelined many would-be buyers and renters.
Building permits rose 4.1 percent in October to an annual rate of 1.15 million after falling in September. The rebound last month suggests that apartment construction, which accounted for the majority of the increase, could swing upward in the coming months as more Americans turn to renting.
Nearly 33 percent of buildings completed so far this year were apartment complexes and condo towers, compared to just 27 percent before the start of the recession in late 2007. The recovery from that economic downturn over the past six years has reshaped the housing market as those who lost their homes to foreclosures and recent college graduates have moved into rental properties.
The percentage of Americans who own homes has fallen to nearly a 48-year low of 63.7 percent.
This shift has unleashed so much multi-family construction that October’s decrease “could potentially be due to pockets of overbuilding that may exist throughout the country, as well as the cost spikes which make financing new buildings more difficult,” said Philadelphia-based developer Carl Dranoff, chief executive of Dranoff Properties.
Still, Banka said, national statistics don’t necessarily tell the story about what is going on in Aurora and around Colorado because the market here is significantly stronger than much of the country.
“It’s still very hot,” she said.
— The Associated Press contributed to this report.