Las Vegas housing analyst Dennis Smith is projecting 5,100 new-home sales and 45,000 resales this year, up slightly from a year ago, with median home prices staying relatively flat as the “shadow inventory” of foreclosures is released onto the market.
New-home sales have increased 27 percent for the first six months and resales are up 7.5 percent from last year’s dismal numbers, the president of Home Builders Research reported.
Net sales per new-home subdivision have been averaging 0.3 for the last 10 weeks, hitting a high of 1.1 in May and surging to 0.5 the week ending July 11 when Harmony Homes reported 16 sales at its Stonehaven community in Henderson.
“So there is some activity out there,” Smith said Thursday in his quarterly webcast. “It’s not as strong as we’d like to see, but given the circumstances of the market, it is what it is.”
The top builder for the first six months was DR Horton with 406 closings, a 14.8 percent market share, Home Builders Research reported. Cactus Hills Square, a new-home community by DR Horton in the southwest valley, was the top-selling subdivision with 30 sales in the second quarter.
Homebuilders are back in the hunt for finished lots, or lots that have utilities and infrastructure in place and are ready for vertical construction. Some are even looking at partially finished lots and raw land, Smith said.
He counted 19,218 finished lots in the valley, estimating that 12,000 of them are controlled by builders and not for sale. The remaining 7,200 lots are owned by investors, and only about half of those are available for sale, Smith said.
“Builders are still in business in Vegas and especially public builders had to replace finished lots because they didn’t have enough to keep their market share,” he said. “If the supply of lots is falling, they’ve got to go out and buy. We’ve seen prices of lots actually start to go up.”
Finished lots that were selling in the $30,000 range a year ago are now going for $40,000 to $45,000, Smith said.
That doesn’t bode well for homebuilders who must compete with foreclosure and short-sale prices of $75 to $80 a square foot. The median price of a new home in Las Vegas fell to $186,957 in June, a 9.1 percent decrease from a year ago, Home Builders Research reported.
“We think pricing is coming down because we’re building smaller homes,” said Wayne Laska, owner of Storybook Homes, one of the few remaining private builders in Las Vegas. “It’s not really a function of foreclosures.”
Laska said vertical construction costs have come down 25 percent to 30 percent from their peak in 2006, primarily because of competition among subcontractors.
“Pricing in general in Las Vegas has been steady and consistent for 14 months,” he said. “In the new-home business, we compete with resales, no question about that. There’s a $59,000 gap between resales and new homes. We believe that’s too high. It needs to come down to the $30,000 range.”
Rick Hildreth of Land Advisors Organization said homebuilders are being more selective about land acquisitions. He recently sold 207 finished lots in the master-planned Providence community to Richmond American Homes for $4.8 million and 20 acres in Mountain’s Edge to Lennar for $3.9 million.
“They’re not as aggressive as they were two months ago because home sales have gone down dramatically since the tax credit ended,” Hildreth said. “Also, it’s seasonal. The summer is always slow. It’s a combination of both, leaning more toward the tax credit.”
Housing analyst Smith said there have been reports that some banks, not all, are releasing the so-called “shadow inventory” of foreclosed homes, which would account for June’s increase in homes for sale on the Multiple Listing Service.
Contact reporter Hubble Smith at hsmith@reviewjournal.com or 702-383-0491.
RESIDENTIAL LOTS Submarket Finished lots Unfinished
East 725 1,175
North Las Vegas 3,551 2,420
Northwest 4,511 906
Henderson 3,842 2,233
Southwest 6,589 3,451
Total 19,218 10,185
Source: Home Builders Research