Las Vegas home sales double in month, driven by expiring tax credit
New-home sales in Las Vegas spiked to 972 in June, driven by 79 high-rise condominium sales and a rush to beat the June 30 escrow closing deadline for the homebuyer tax credit, which Congress extended at the eleventh hour.
June sales more than doubled the 476 figure from the same month a year ago, and the 2010 first-half total of 2,995 new-home sales is up 27 percent from a year ago, Home Builders Research reported Monday.
The firm counted 4,298 existing-home sales during the month, compared with 4,536 resales in June 2009. For the year, existing-home sales have increased 7.5 percent to 21,773.
While June’s numbers are encouraging, Home Builders Research President Dennis Smith said he wouldn’t be surprised if July figures drop to where they were earlier in the year.
“This will be the result of the market supporting itself without the aid of the tax credit,” Smith said. “Look at what we’ve got, 900 (new-home) closings in June. That’s double from past months, but I think most builders are realistic to the fact that the tax credit was a short-term fix.”
There were 402 new-home building permits pulled in June, up from 368 a year ago. The six-month total of 2,862 permits represents an 82 percent increase from the year-ago period.
The median price of a new home declined for the third consecutive month to $186,957 in June, a 9.1 percent decrease from a year ago. Looking at price segments, Smith found that 63 percent of traditional new-home sales — excluding high-rises — were priced at less than $200,000; 28 percent were priced from $200,000 to $300,000; and 8 percent were priced above $300,000.
Resale median price rose $1,000 from a year ago to $126,000 in June. It’s the first year-over-year increase in existing-home prices since first quarter 2007, but that’s not to suggest the resale market is out of the woods yet, Smith said.
The long path to housing market recovery in Las Vegas is impeded by high foreclosure rates, short sales that take months for lender approval, record unemployment, tight lending policies and underwater mortgages, he said.
Las Vegas-based SalesTraq reported 983 new-home closings in June at a median price of $182,440, down 12.7 percent from a year ago. Existing-home closings totaled 4,968 at a median price of $123,000, a slight increase of 0.8 percent from last year.
Inventory climbed slightly, but transaction numbers did not decline markedly as might be expected given the removal of the tax credit, Frank Nason of Residential Resources said. First-time buyers who entered contract by April 30 are eligible for up to $8,000, while move-up buyers get $6,500. Congress extended the closing deadline from June 30 to Sept. 30.
“I continue to believe it will be months before the market really gives us a reliable indication of which direction it is going after all the government intervention,” Nason said.
He found a three-month trend in Clark County assessor’s data that showed more properties have gone to trustee deeds, or acquisition by the bank, compared with properties already in foreclosure that have been sold to third parties. He counted 1,487 trustee deeds in June, compared with 1,056 foreclosure sales.
“The banks are starting to build up a backlog of foreclosed properties,” Nason said. “They’re going to have to start releasing more properties because they don’t want them sitting on their books.”
SalesTraq showed a 30 percent decline in bank repossessions from a year ago to 1,549 in June, bringing the six-month total to 8,481. The average price for 1,684 real estate-owned, or bank-owned, home sales in June was $121,000, compared with $132,000 for 1,468 nondistressed home sales, the firm reported.
Housing analyst Smith said it’s time for Las Vegas to move on to the next stage of recovery without the government “crutch.”
Extending the closing deadline for the tax will help existing sales because of delays in the short-sale process, or homes sold for less than the mortgage owed, he said, but it won’t help new-home sales.
“Those that expect the number of closings on new homes to show a positive effect from the tax credit are going to be disappointed,” Smith said. “There’s no sense of urgency right now. Buyers that were out there went ahead and took advantage of the tax credit. Most of the builders have already closed those loans.”
He has no reason to think the housing industry will “tank” after the tax credit expiration. Several builders have already incorporated programs that give buyers $8,000 in financing incentives and upgrades to offset the lost credit, Smith said.
Contact reporter Hubble Smith at hsmith@reviewjournal.com or 702-383-0491.