New homes in Las Vegas finishing year on strong note

The new-home segment is finishing the year on a strong note with 596 sales in November, bringing the year-to-date total to 4,899, a 39 percent increase from a year ago, Las Vegas-based Home Builders Research reported Monday.

New-home sales have settled between 590 and 610 for each of the past four months.

"Anytime we can report a year-over-year positive change of 40 percent, it is very impressive," said Dennis Smith, president of the housing research firm.

He's projecting about 6,000 new- home sales for 2013, compared with a peak of nearly 39,000 in 2005.

The median new-home price continued to rise to $219,285 in November, an increase of $15,064, or 7.4 percent, from a year ago. It's the highest monthly median price for new home closings since March 2009, Smith noted.

The firm counted 478 new-home permits in November, and a total of 5,505 for the year, up 64 percent from a year ago. While the numbers are up from recession lows, the 64 percent increase is an "astounding statistic," the housing analyst said.

"We can't recall ever reporting an annual rise of permits by 64 percent," he said.

It's not unusual for the market to sink into a "holiday funk" with declining traffic through new-home subdivisions and fewer net sales, a key measure of new-home demand, he said. However, net sales per subdivision has kept up a robust pace of 0.7 to 0.8 per week.

Overall, the new-home segment of the Las Vegas housing market is improving, though it doesn't look like much is going to change next year, Smith said.

Inventory is still being choked off by Nevada's robo-signing law that requires lenders to provide an affidavit of authority to foreclose, leaving an estimated 15,000 mortgage defaults in the system.

"Earlier in the year, as recently as the fall, I thought banks were going to work their hardest to get AB 284 (Nevada's robo-signing law) repealed," Smith said. "The question is how much was in the shadow inventory and how much would be dumped on the market. Nobody really knows."

Home Builders Research reported 3,978 resale closings in November. The 11-month total comes to 45,774, a 3.1 percent increase from a year ago.

The median resale price rose 16.6 percent to $133,000, a gain of $19,000 from November 2011.

Smith said prices will continue a slow improvement in 2013, probably not more than 15 percent.

"We certainly do not expect a large increase in prices," he said. "There are still too many distressed properties. But a slow improvement will be very good for sustaining the increases."

A December report from Zillow.com online real estate service showed Las Vegas as the No. 4 sellers' market in the nation. Top sellers' markets tend to have low inventory, homes selling for more than the asking price and a quick turnover.

Zillow analyzed data on actual sales prices compared to asking prices, the number of days listings spent on Zillow and the percentage of homes on the market with a price cut. San Jose, Calif., was the top sellers' market.

"Many of the strongest sellers' markets are in areas that were hardest-hit by the housing bust, places like California, Nevada and Arizona, which may seem counterintuitive," Zillow chief economist Stan Humphries said. "But much of that strength is driven by investor interest, as many distressed and nondistressed homes are purchased and transformed into rentals. "

Smith said many new-home subdivisions in Las Vegas have closed out and are not being replaced because of the lack of available finished lots.

"The trend of the last couple of years was public builders could find finished lots from banks or investors for prices that allowed the builder to sell homes as competitive prices," he said. "Those lot inventories have been depleted, and many of the lot purchases this year have been from other builders."

Another factor that will drive home prices higher in the new year is the rising cost of labor, Smith said. He's hearing home builders talk about 10 percent increases in subcontractor charges.

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