Vegas homebuilders hold steady

Despite elevated interest rates, Las Vegas area homebuilders are holding steady and reporting solid sales even as single-family home prices slightly increase.

Andrew Smith, president of Las Vegas-based Home Builders Research, reported that builders ended May with 18 consecutive weeks of 200 or more net sales (sales minus cancellations) dating to mid-January. There were 0.9 net sales per project in May, which is above the market average of 0.7 sales, Smith said.

In another good sign, Smith reported the May cancellation rate was the lowest of the year at 13 percent — the same rate where it was in April 2022 before interest rates started to rise.

The market is still going through a reset.

The 990 new-home closings in May marked a 7 percent decrease over May 2022 and are down 9 percent for the year through May, Smith said.

Single-family home prices rose 3 percent year over year to $511,319, while attached products fell 1 percent to $364,990.

Builders continue to open new communities throughout the valley, Smith said. There were nine openings in May that brought 894 lots onto the market with the average base asking price at $537,278.

D.R. Horton opened two more product lines in their Heartland project in the Villages at Tule Springs master-planned community in North Las Vegas, Smith said.

The Inspirada master plan in west Henderson also saw new communities from Lennar and Tri Pointe Homes come online, Smith said.

Builders took out 1,216 permits in May, which Smith said was 11 percent higher than a year ago. Despite that increase, the 4,835 permits taken out by builders were down 27 percent as they responded to the reduced demand with interest rates doubling over the past year.

Henderson recorded 32 percent of the permits in May while the east valley got a boost with Touchstone Living pulling 101 permits for its Independence project at the former Royal Links golf course.

“We call it the “Touchstone Effect” because of the similar outcomes we saw with the arrival of their Mosaic project in the normally slower south submarket area and Watercolor in North Las Vegas,” Smith said. “Both of these communities have a relatively large number of home sites (797 and 1,180 respectively) and have been amongst the top-selling communities since opening.”

There were more than 100 permits each issued to builders in Summerlin and the Cadence master plan in east Henderson, Smith said.

Some 53 percent of new home closings in May were in master plans, led by Summerlin with 106, Cadence with 88 and Inspirada with 65, Smith said.

Summerlin had a median closing price of $722,495 compared with $454,569 at Inspirada and $442,023 at Cadence. Lake Las Vegas had an average closing price of $650,000. It was $484,990 at Skye Canyon.

The demand for new homes remains elevated over existing homes as homeowners have been reluctant to put homes on the market with higher interest rates.

The new home market share in overall closings in May was just under 24 percent and has decreased for four straight months. That, however, remains well above the historical average of 15 percent, Smith said.

Smith reported that 19 percent of new home closings in May were done with cash based on data from Clark County.

Of those using financing, the average loan amount was $432,711. The largest loan for a new home closing in May was $2 million by Bank of America for a residence in the Vu Pointe community by Christopher Homes, Smith said.