Las Vegas house prices dropped to their lowest level of the year last month as higher mortgage rates throws cold water on the market.
The median sales price of previously owned single-family homes — the bulk of the market — was $430,990 in November, down 2 percent from October but still up 2.6 percent from November of last year, according to a new report from trade association Las Vegas Realtors.
Southern Nevada home prices have been largely sliding for months amid a broader slowdown in the market. According to association data, November’s median sales price was the lowest of 2022, and year-over-year price gains have shrunk.
“Local home prices are starting to look more like they did a year ago,” LVR President Brandon Roberts said in a news release. “But we’re certainly in a different place than we were last year, when prices were soaring and setting records. Of course, as we said at the time, those conditions were not sustainable.”
With mortgage rates more than double what they were a year ago, homebuyers continue to pull back in Southern Nevada.
A total of 1,521 houses traded hands in November, down 53.5 percent from the same month last year, the association reported.
Prospective sellers also appear to be shying away, as the association reported 2,096 new listings for single-family homes last month, down 26.5 percent year over year.
Meanwhile, available inventory slid last month but still was vastly higher than it was a year ago. A total of 7,342 houses were on the market without offers at the end of November, down 7.1 percent from October but up 161.7 percent from November of last year.
Roberts said in the release that since mortgage rates started rising this year, it has “sparked a situation where many buyers are struggling to afford a home, while many homeowners are reluctant to sell and give up the historically low interest rate they’re enjoying on their current home.”
Last year, rock-bottom mortgage rates fueled a homebuying frenzy in Southern Nevada. Sales prices hit new all-time highs practically every month, homes sold rapidly, house hunters showered properties with offers, and builders regularly raised prices and put buyers on waiting lists.
Locally and nationally, however, buyers have been largely pumping the brakes for months. 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 around the country.
The average rate on a 30-year home loan was 6.49 percent last week, up from 3.11 percent a year earlier, mortgage buyer Freddie Mac reported.
Selma Hepp, deputy chief economist with housing tracker CoreLogic, said in a statement last week 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.
Amid the drop in home purchases in Southern Nevada, sellers have increasingly slashed their prices, and builders have offered more incentives to house hunters and higher commissions to agents who bring in buyers.
All told, the median sales price of a previously owned single-family house has now dropped by just over $51,000 from a record-high $482,000 in May, according to Las Vegas Realtors data.
That month, sales prices were up 25 percent from a year earlier.