Las Vegas’ housing market shows signs it’s tapping the brakes

Las Vegas’ housing market, after months of frenzied activity, is showing some signs that it’s tapping the brakes.

Resale totals have fallen the past two months, and available inventory has climbed for three straight months as house prices keep setting all-time highs. Homebuilders also have seen drops in sales and customer traffic during what is historically the spring buying season.

Nationally, the homebuying binge appears to be cooling, too.

“The housing market was going 100 miles per hour and now it’s down to 80,” Daryl Fairweather, chief economist of listing site Redfin, said in a report this month.

Of course, there are still more than a few signs that Las Vegas’ housing market remains in overdrive, and there’s no way to predict whether sales will keep falling or inventory will keep rising. Overall, sales prices are still going up, houses are still selling rapidly, and the tally of available listings remains small.

“What do we have, 12 days’ supply?” said broker Aldo Martinez, president of trade association Las Vegas Realtors.

Still, housing markets are always prone to ups and downs, and the latest frenzy isn’t going to last forever.

Sales down

Fueled by cheap money, buyers have been showering Southern Nevada houses with offers, often within days of hitting the market, and routinely paying over the asking price, multiple sources have said.

Out-of-state buyers, especially Californians, have been purchasing more homes than usual in less-expensive Las Vegas, in no small part because people have been working from home during the pandemic without the need for a commute.

Amid the surge of demand, homebuilders have put buyers on waiting lists, and on the resale side, buyers have offered perks to get their bids accepted, including letting sellers stay in the home rent-free after the deal closes to give them time to find a new place.

When, or how, the buying boom ends is anyone’s guess. But house hunters have pulled back lately as the streak of record-high prices raises concerns that some people are getting priced out.

Buyers picked up 3,189 previously owned single-family homes last month, down 9.6 percent from April. That month, sales fell 5.3 percent from March, according to LVR data.

The drops were a sharp reversal from March, when house sales shot up 34.7 percent from February, the association reported.

At the end of May, 2,031 single-family homes were on the market without offers, up 11.2 percent from April. Inventory rose 3.1 percent month to month in April and 5.7 percent in March, LVR data shows.

Meanwhile, homebuilders reported 1,085 net sales — newly signed sales contracts minus cancellations — in Southern Nevada last month, down 10.7 percent from April, when sales fell 22.1 percent from March, according to figures from Las Vegas-based Home Builders Research.

Customer traffic for Southern Nevada subdivisions last month was down 25 percent from its recent peak, set in March, Home Builders Research President Andrew Smith reported.

‘Not the bursting of a bubble’

Martinez, of LVR, chalked up the recent fluctuations to “normal seasonal flows” and indicated the market could regain momentum by August or September. But he also noted people might be doing things other than house hunting, such as taking vacations, an industry that has surged lately as coronavirus vaccines roll out.

Nationally, the housing cooldown “is not the bursting of a bubble,” Redfin’s Fairweather said in the recent report, but is instead “a sign that consumers might rather spend their time and money on other things besides housing now that travel, dining and entertainment are resuming in full force.”

So, will Las Vegas’ housing market crash like it did after easy-money-fueled bubble of the mid-2000s? Will it gently cool off to something more normal? Will it slam the brakes, hit the gas, and repeat, for months on end?

Who knows?

Contact Eli Segall at esegall@reviewjournal.com or 702-383-0342. Follow @eli_segall on Twitter.