Las Vegas is leading the country in new listings, so why aren’t prices dropping?

The Las Vegas Valley leads the country in the year-over-year increase in new home listings on the market for sale, according to a new study from Realtor.com. But prices remain at record highs defying market fundamentals.

Active listings were up 77.6 percent in June of this year compared to the same time last year, which tops the 50 largest metro regions that Realtor.com studied via Multiple Listing Service data.

Jake Krimmel, a senior economist at Realtor.com, said the most “eye-catching” statistics is obviously the valley’s massive jump in listings, however there are a number of interesting market dynamics playing out in the region as well.

“This is more than double the national growth rate of 28.9 percent and nearly twice the growth rate of the Western U.S. in general,” he said about the 77.6 percent jump. “Coupled with the fact that homes are sitting on the market 11 days (or 28 percent) longer compared to the national average of five days, the Las Vegas market is clearly continuing to shift in a more buyer-friendly direction.”

Las Vegas’ home prices shot back up to a record high, at $485,000, as inventory continues to flood the market. High interest rates coupled with high mortgage rates have pushed many potential homebuyers to the sidelines, and has also locked potential home sellers into the low rates they were able to obtain during the pandemic. A lack of new home construction due to a high amount of federally controlled land in the valley is also keeping prices elevated along with a growing population and burgeoning luxury real estate sector.

Krimmel said the valley is clearly leaning towards someone looking to buy a home right now given the glut of inventory.

“Buyers have more options to choose from, more time to make their choices, and fewer buyers to compete with — and sellers are cutting prices as a result. About 27 percent of listings had a price cut, about 6 percentage points above the national average, another indication of market softening.”

However Krimmel added typical market fundamentals around supply and demand don’t seem to be coming together like they usually do in the valley, as predominately, when it comes to basic economics, a significant rise in listings should invariably drop prices.

“When it comes to list prices right now though, we are not seeing much movement there yet,” he said. “List prices were down just 1 percent year over year and 0.4 percent on a square foot adjusted basis. This is broadly in line with national averages. So despite all the supply on the market — which means competition among sellers — the price of homes for sale is not budging much.”

However some cities have seen price drops, he added, including Austin and Miami with 5 to 6 percent decreases year over year. Krimmel said only time will tell if the valley follows this trend. Both these Texas and Florida cities experienced a building boom over the past few years, however Las Vegas has not in relative comparison.

“Looking forward it will be important to watch how Las Vegas sellers and buyers react to all this inventory — which now sits 36 percent above pre-pandemic levels (nationally, inventory is still about 13 percent below pre-pandemic norms),’ he said. “Will motivated sellers drop prices? Or will they wait out the market — or pull the listing — rather than negotiate?”

Contact Patrick Blennerhassett at pblennerhassett@reviewjournal.com.