Las Vegas new home sales down 58 percent

Dennis Smith of Home Builders Research reported 375 new home sales in February, an increase of nearly 100 units from January. However, the two-month total of 659 is down 63 percent from a year ago.

The resale market continued to “percolate” with 2,606 recorded escrow closings, up 75 percent from the same month a year ago, he said.

The median price of all recorded new home sales in February was $219,900, a drop of $63,100, or 22.3 percent, from a year ago. Existing home prices fell 38 percent, or $90,000, to $145,000.

“Has affordability returned to the new home market? Absolutely,” Smith said. “The Las Vegas new home segment has to be considered one of the best deals anywhere in the country when you bear in mind the long-term potential for appreciation.”

New home permits hit a record low in February at 139, down from 179 in January. Smith doesn’t expect home builders to significantly increase their permit count during the year. They could produce the lowest number of new homes since the mid-1980s, he said.

Housing market numbers typically lag what’s actually happening, Smith said. For instance, they don’t account for the Federal Reserve’s action Wednesday, buying up to $300 billion in long-term bonds, a move that will keep interest rates low.

“It’s not all bleak,” the housing expert said. “Lower rates are going to help. What the Fed has done is virtually say, ‘We’re going to keep rates low for the foreseeable future. Let’s get this thing changed.’ They’re going to keep throwing stuff against the wall until it sticks.”

Lower interest rates and reduced home prices equate to affordable housing. Home sales will pick up as the job situation and economy start to stabilize, Smith said.

“We’ve got to get through the inventory of resales and we’re not there yet, but there’s a light there,” he said. “The housing market is starting to get in position to recover.”

BusinessWeek ranked ZIP code 89131 in northwest Las Vegas No. 15 among the nation’s top 27 areas with the most improved home sales. Fourth-quarter home sales totaled 284, up 27 percent from the year-ago period. The median price was $275,934, down 18.5 percent, BusinessWeek reported.

Ken Perlman of San Diego-based Sullivan Group Real Estate Advisors said he likes to frame Las Vegas in the context of the greater region and the United States as a whole. Fundamentals still exist, particularly a lower cost of living relative to Southern California, the feeder market for Las Vegas.

“It all relates to jobs and I think the key to the economy is basically employment,” he said. “That’s going to determine the housing turnaround. Obviously, foreclosures are too, but bigger than foreclosures is the employment picture.”

Perlman expects to see some further softening in new home prices, but said builders literally stopped building because median prices have dropped below replacement costs. There’s not a lot of standing inventory and not a lot of new supply, he said.

“Is the situation challenging right now? Absolutely. You’ve got unemployment, foreclosures, prices being depressed. Again, it’s painful, but we’ve got to work through foreclosures. There’s no quick fix,” Perlman said.

Smith of Home Builders Research said he’s growing tired of all the depressing statistics that have bombarded the newspapers, airwaves and Internet.

“There is no doubt the sheer volume of the negative statistics has contributed to this economic recession,” he said. “We continually look very hard between the lines trying to find some positive slant to the statistics.”

For example, Home Builders Marketing in Phoenix reported that median prices had been relatively flat with an upward trend during the last five months. The median new home price in Phoenix is $210,000 and the resale median is $120,000.

What Smith found interesting was the origin of buyers in Phoenix. Understandably, California was second to Arizona, but was Canada third.

“We’ve been told by some local Realtors that there are many Canadian citizens shopping for real estate in Las Vegas,” Smith said. “They have always preferred Phoenix over Las Vegas, but we have wondered if the affordability factor was comparable, would Las Vegas see more Canadian buyers? Prices are still lower in Phoenix, but not by much.”

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