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New-home prices fall to levels of 10 years ago

Facing increased competition from foreclosures and short sales, Las Vegas homebuilders have not only had to cut production, but keep prices around $100 a square foot, the standard from about 10 years ago.

Signature Homes built the least-expensive home at an average of $84.64 a square foot from January through July, Las Vegas housing analyst Larry Murphy reported Friday. The most expensive average was $137.28 from Toll Bros.

Some builders produce primarily single-story homes, which carry a higher average cost per square foot than two stories, the president of Las Vegas-based research firm SalesTraq said. Also, homes built in master-planned communities and on larger lots are likely to cost more.

Builders such as Signature, Adaven and Beazer target entry-level buyers, while Toll Bros. and Del Webb go after luxury and move-up buyers, Murphy said.

Other data from SalesTraq showed American West building the largest homes at an average of 2,586 square feet, while Adaven built the smallest homes at 1,578 square feet. All things being equal, it costs less per square foot to build a larger home than it does a smaller one, Murphy noted.

The top builder for the first seven months of the year was KB Home, with 384 single-family home closings at an average price of $184,496, or $101.28 a square foot.

Murphy said he wouldn’t have believed three years ago that builders would be selling new homes for $100 a square foot in 2010.

“Builders are able to sell homes for less money than I ever anticipated,” he said. “The reason is all the builders who lost their lots to the bank … Kimball Hill and Engle Homes. Harmony bought lots from Pardee. Warmington gave up lots at Mountain’s Edge and bought in Providence. They had a chance to get into Providence for less land basis than Mountain’s Edge.”

Unfinished residential lots aren’t as cheap as they were a year ago, but some are available for as low as $26,000, Murphy said.

“Bottom line is builders have been able to find land really cheap and consequently sell cheap because vertical construction cost has gone down as well,” he said.

The market does not appear to be getting better. The number of available real estate-owned, or bank-owned homes, in Las Vegas exceeded 3,000 in August, although values have continued to hold relatively steady for nearly 18 months, a report from Equity Title of Nevada shows.

For the rolling 12-month period ending in August, the title company reported 36,594 single-family home sales at a median price of $138,550 and average price of $167,363. The largest segment of sales (8,731) was for homes priced at less than $100,000.

SalesTraq showed 3,923 new-home closings and 3,458 new-home building permits through August, both numbers on pace to beat last year. The median new-home price of $218,000 is up 3.3 percent from a year ago.

Murphy said he’s received negative feedback on his new-home report, including a Realtor who said it’s a “crime” that new homes are still being built at any price considering excess inventory of more than 22,000 homes on the Multiple Listing Service.

“Some people feel home builders should disband and shut down completely and not give people a chance to buy a new home, even though there’s evidence that people still want a new home as 5,000 or 6,000 of them will buy this year,” the analyst said. “Last time I looked, it’s not a crime to sell newspapers or to sell new cars and it shouldn’t be a crime to sell new homes.”

Contact reporter Hubble Smith at hsmith@reviewjournal.com or 702-383-0491.

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