Things aren’t as bad as they could be in the Las Vegas housing market, which is a piece of positive news to take into the end of one of the worst years on record.
Home prices have plummeted more than 50 percent from their 2006 peak, but they have stabilized over the past five months as the “phantom” inventory of foreclosures held by banks never materialized.
The median price of 4,254 recorded resales in October was $125,000, down just $250 from the previous month, Home Builders Research reported Wednesday. It has bounced around $125,000 since June, hitting a low of $122,000 in August.
“This surely appears to be the bottom of the pricing spiral in the existing-home segment,” Home Builders Research President Dennis Smith said. “The only thing that could change this would be a flood of foreclosures entering the marketplace. It’s becoming more evident that the lenders aren’t going to allow this to happen.”
Estimates of foreclosed homes in the pipeline ranged from 20,000 to 75,000 locally, with national reports of up to 7.9 million. Industry experts said banks were releasing only a small number of homes in order to prop up prices. Others said banks don’t have the staff to handle the volume.
“It doesn’t matter at this point,” Smith said. “As long as their number remains near the present level, demand is enough to keep prices near $125,000 for the upcoming months.”
Existing-home sales topped 4,000 in four of the past five months, and the year-to-date sum of 36,843 represents a 47 percent increase from a year ago.
The new-home segment continues to lose ground, though standing inventory of new unsold homes is down to less than a one-month supply at about 200.
The median new-home price dropped to $205,000 in October, down 1.4 percent from $208,240 in September and down 17 percent from a year ago, Home Builders Research reported.
Builders sold 471 new homes in October, a small bump from 452 in September. For the year, new-home sales decreased 55 percent to 4,090 closings.
Construction of new homes in the United States fell sharply last month, showing potential weakness in the economy’s recovery. The Commerce Department said on Wednesday housing starts dropped 10.6 percent to a seasonally adjusted annual rate of 529,000 units, the lowest level since April and the percentage drop was the biggest since January.
Las Vegas-based SalesTraq reported 332 new-home permits, an indication of construction starts, in October, compared with 407 in September and 396 in October 2008. Builders have pulled 3,149 new-home permits through October, a 42 percent decrease from a year ago.
“As it relates to construction activity, clearly the markets are down,” said Scott Wright, division president for Pulte Homes in Las Vegas. “Permits are down 55 percent, closings are down 45 percent. We’re still building, we’re among the top three. We’re seeing activity in different locations and a fundamental shift in product. People want smaller homes and a lower price per square foot.”
Wright said Pulte is staying away from harder-hit areas of the Las Vegas Valley such as the east and north where foreclosures are selling at $60 a square foot, far less than Pulte’s $100 a square foot.
SalesTraq counted 486 new-home sales in October, bringing the total for the year to 4,069, a 54 percent drop from a year ago. The median price is down 16.6 percent to $205,000.
Of the 4,417 existing-home closings reported by SalesTraq for October, 51 percent were bank-owned homes with a median closing price of $116,000. The remaining sales had a median price of $130,000.
The much-ballyhooed avalanche of foreclosures has yet to hit Las Vegas, SalesTraq President Larry Murphy said. Banks took back 2,301 homes in October, 1.9 percent fewer than in September and 6 percent fewer than in the same month a year ago. They sold off 2,260, leaving the real estate-owned, or bank-owned, inventory at 12,624, down from nearly 15,000 a year ago.
Murphy said there were about 25,000 foreclosures in 2008, and he expects this year to be about the same. He does not anticipate foreclosures doubling or tripling in 2010, despite the 50,000 to 75,000 number that’s been predicted.
Contact reporter Hubble Smith at hsmith@reviewjournal.com or 702-383-0491.