While the economy of the Pikes Peak region remains a prosperous and successful one, with median household income 11.2% above the national figure, the last couple of years have seen a departure from the rapid pace of growth we’d become accustomed to. Since the beginning of 2024, regional payroll growth has averaged 102 jobs per month, down from 792 in 2022-23, and this figure is likely to get a downward revision.
A construction and real estate cycle has been a key driver of this slowdown. As a region that is typically experiencing growth and one with high population turnover, these sectors have particularly high importance here — construction accounts for 6.7% of the region’s GDP, compared with 4.4% nationwide.
The increased demand for residential space that came with the shift to remote work during the pandemic, as well as extremely low interest rates, fueled a surge in housing demand. This drove an increase in residential building permits, both here and nationwide. As the accompanying graphic shows, the surge was sharper here — and so was the decline after interest rates started rising in 2022.
The drag on the economy from reduced building activity has been compounded by the mortgage rate lock-in effect that has chilled home sales as owners who obtained or refinanced low rates have been reluctant to move. In the Pikes Peak region, annual home sales have been below 12,000 for each of the past three years, after peaking at more than 18,000 in 2021. This impacts not only the commission earnings of real estate agents, but also a variety of other economic activity, such as furniture sales.
Employment in construction and financial activities — the category which includes real estate — has seen declining trends in the past couple of years, pulling down the region’s job growth total.
There are reasons to be hopeful for a turnaround in 2026, although there is also cause to believe it may be modest. The most encouraging sign was a rebound in building permits in 2025. This was driven by the multi-family category, with the number of single-family dwelling units permitted still slightly down from 2024. The additional permits indicate more construction activity is coming.
While the mortgage rate lock-in effect is still very much with us, its significance is gradually diminishing — the share of outstanding mortgages in Colorado at rates under 4% peaked at 76% in the first quarter of 2022 and was down to 59% in the third quarter of 2025. The slow home sales of the past several years mean that there are a considerable number of pent-up transactions — on both the seller and buyer sides — waiting to happen. Moreover, the regional population has a particularly large population cohort in its early 30s, an age where people are often looking at starting families and buying homes.
So, there are conditions in place for a rebound in both construction and home sales. However, there are some headwinds that may temper its magnitude. As discussed in a recent column1, homebuilding is facing labor disruptions from immigration policy and tariff costs, as well as an environment where interest rates, while not high by historical standards, remain higher than we’ve gotten used to since the 2008 financial crisis.
1 “Policy Headwinds for Homebuilders,” Southern Colorado Business Forum & Digest, Aug. 2025