Analyst: Market conditions help boost new-home sales

Las Vegas' new-home market is undergoing a temporary sales surge because of the low inventory of existing homes and the poor condition of foreclosed homes, a local analyst said Wednesday.

Home Builders Research reported 310 new-home sales in February, a 31 percent increase from 237 in the same month a year ago. Still, the median price fell 2.3 percent, to $193,900.

"We expect that new home prices could possibly rise by 4 percent to 5 percent during the next three to four months," Home Builders Research President Dennis Smith said. "It's not going to be a sign of getting back to normal, but some builders in high-demand locations will take advantage of the increase in sales."

Smith said he doesn't expect the sales trend to continue past midyear because lenders will start to process foreclosures again and bring them back into the resale supply to compete with new-home sales, Smith said. Banks have slowed notices of default as a result of Nevada's robo-signing law.

Even with the foreclosure slowdown, resale activity continues on a record pace with 4,132 existing home sales in February. The two-month total of 7,978 is up 26 percent from last year. The median price dropped by $10,000, or 8.7 percent, to $105,000.

Homebuilders pulled 236 permits in February, exactly the same number as a year ago. Smith said he expects building permits to double in the next few months. Net sales per subdivision have doubled to 0.6 a week since the beginning of the year, he said.

"We're getting more contracts written. They don't start that house until it's sold," Smith said.

"People are tired of looking at those (foreclosures)," Smith added. "Chances are, they're looking at REOs and short sales with five other bids. That's not fun for a real buyer looking to move into a house."

New homes are competitively priced with existing homes, and they're usually built better, under warranty, with the latest technology and energy-saving features, he said.

The monthly data are lagging indicators of current supply and demand, Smith said. It's important to balance the number of closings and median prices with the declining inventory of existing single-family homes for sale in the Multiple Listing Service, he said.

Inventory is down 15 percent from a year ago, and median list price is up 13 percent, the Greater Las Vegas Association of Realtors reports.

But SalesTraq President Larry Murphy questions real estate agents' fears that banks have shut off the foreclosure pipeline in response to the robo-signing law. Even though notices of default have dropped dramatically, foreclosures continue unabated in Las Vegas, though they're down from year-ago levels, he said.

"I take issue with anyone who says foreclosures have dried up. They have not," Murphy said. "I would not take issue with notices of default and trustee sales. But what is the lag time between the slowdown in (notices of default) and actual foreclosure completions? Maybe six months, maybe a year. I don't know."

Murphy counted 1,589 auction or trustee sales in February at a median price of $107,000, or $79 per square foot. He also questions claims that homes in the $80,000 to $125,000 price range are being snapped up with multiple offers.

"Oh, really? Then why are there currently 4,910 listings on the MLS in that price range?" he asked.

There were 893 closings in that price range in February, which would represent a supply of 5.5 months, Murphy calculated. With 19,923 listings and 3,630 closings in February, that's also 5.5 months' supply.

"This tells me that homes in the $80,000 to $120,000 price range are selling at exactly the same rate as all the other homes," Murphy said. "There's no difference."

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