Updated November 29, 2022 - 6:15 pm
Las Vegas home prices dropped further than the national average in September, a new report shows, as buyers around the country pull back over higher mortgage rates.
House prices in Southern Nevada fell 2.4 percent from August to September, compared with a 1 percent dip nationally in that time, according to the S&P CoreLogic Case-Shiller index released Tuesday.
Prices are still up from year-ago levels, but the gains have tailed off.
Las Vegas’ home prices were up almost 13 percent year-over-year in September, compared with a 28.5 percent annual increase in March, according to Case-Shiller data.
Locally and nationally, homebuyers have been largely pumping the brakes for months, following last year’s cheap-money-fueled buying binge. The Federal Reserve has raised interest rates multiple times this year in a bid to fight inflation, and the jump in borrowing costs has sparked fewer home sales.
Selma Hepp, deputy chief economist with housing tracker CoreLogic, said in a statement Tuesday that housing markets “continue to face a loss of consumer confidence” and an “ongoing standoff between buyers and sellers.”
Potential buyers are “held back by the rapidly rising cost of homeownership and fears of price declines,” said Hepp, who added that potential sellers have financial incentives to stay put, as they might already have a lower mortgage rate than what they’d get on a new purchase.
The average rate on a 30-year home loan was 6.58 percent last week, up from 3.1 percent a year earlier, according to mortgage buyer Freddie Mac.
“While buyers are stepping aside waiting for more affordable prices and rates — causing the slowdown on price growth — would-be sellers are sticking their ground and holding tight to the inventory they currently own,” Nicole Bachaud, senior economist with listing site Zillow, said in a statement Tuesday.
Amid the jump in borrowing costs, sales totals in Southern Nevada have fallen sharply from year-ago levels, sellers have increasingly slashed their prices, and builders have offered more incentives to house hunters and higher commissions to agents who bring in buyers.
On the resale side, 1,724 houses traded hands last month, down 44 percent from October 2021, and 7,906 houses were on the market without offers at the end of October, up 140.5 percent year-over-year, trade association Las Vegas Realtors reported.
Single-family homes sold for a median price of $440,000 in October, down from a record-high $482,000 in May, according to the association.
Higher mortgage rates have “shrunk the buyer pool,” which has led to increased inventory and, ultimately, lower sales prices, Las Vegas Realtors President Brandon Roberts told the Review-Journal last month.
During the pandemic’s sales frenzy, buyers often had to “settle for whatever they could get,” he noted. But the market changed quickly this year as interest rates marched higher.
“It was almost overnight,” he said.