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Las Vegas’ housing market cooling faster than others

Updated July 30, 2022 - 1:00 pm

In more ways than one, Las Vegas’ housing market is getting doused with cold water.

People are buying fewer homes, sellers are slashing their prices, and availability is soaring.

Southern Nevada is far from alone in seeing its once-sizzling market cool off lately. But in some key ways, recent reports show, Las Vegas seems to be hitting the brakes harder than other metro areas.

“That’s definitely in line with what I’m seeing,” Taylor Marr, deputy chief economist with real estate brokerage Redfin, told me Friday.

Las Vegas’ market has by no means screeched to a halt, as homes are still selling. But overall, buyers are pulling back as higher mortgage rates wipe out the cheap money that fueled America’s unexpected housing boom after the pandemic hit.

Just over 27 percent of pending sales in the Las Vegas area fell through in June, the highest cancellation rate in the nation, according to Redfin, which reported that home sales nationally were nixed at the highest rate since the onset of the pandemic.

Moreover, 20.3 percent of Southern Nevada listings had a price cut in June, the fourth-highest share in the U.S., and inventory jumped 22.2 percent month to month, the biggest gain in the country, listing site Zillow reported.

The slowdown follows the most heated stretch for housing in a while in Southern Nevada. Fueled by rock-bottom mortgage rates that let people stretch their budgets, sales prices hit new all-time highs practically every month, buyers flooded properties with offers, homes sold rapidly, and the tally of resales hit a record high in 2021.

Housing markets across the country also had a buying frenzy. Marr noted that Southern Nevada’s price growth last year was not “dramatically higher” than a lot of other places.

Still, he pointed to the big inflow of residents here from areas such as Southern California and said that higher interest rates have created disincentives for people to move and priced out first-time buyers.

The average rate on a 30-year mortgage in June was 5.52 percent, up from 2.98 percent the same month last year, according to mortgage-finance giant Freddie Mac.

Locally, buyers picked up around 2,670 previously owned single-family homes in June, down 8 percent from May and almost 25 percent from June 2021, trade association Las Vegas Realtors reported.

The median sales price in June was $480,000, down 0.4 percent from May, the first month-to-month slide in more than two years.

On the construction side, builders logged 713 net sales — new purchase contracts minus cancellations — in June, down almost 24 percent from the same month last year, according to figures from Las Vegas-based Home Builders Research.

Last month’s sales tally was the lowest of the year and marked the third consecutive monthly drop, the firm reported.

Zillow senior economist Jeff Tucker said that Las Vegas, like the rest of the country, is seeing “much less competition between buyers as affordability challenges push many home seekers to the sidelines.”

Las Vegas “stands out” with the biggest monthly and annual inventory growth among the 50 largest metro areas in the U.S., Tucker said. But in most other ways, the “largest slowdowns” seem to be in the nation’s most expensive markets and those with the biggest price jumps throughout the pandemic, he added.

None of this means that sales and prices are doomed to keep sliding for months on end.

Mortgage rates, while still well above year-ago levels, have ticked lower recently, and all of the price slashing could potentially spark more buying, though Redfin’s Marr figures the cuts are more of a reaction to “weak levels of demand.”

So, where does Las Vegas’ market go from here?

We’ll find out soon enough.

Contact Eli Segall at esegall@reviewjournal.com or 702-383-0342. Follow @eli_segall on Twitter.

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