Las Vegas new home sales tumble to 23-year low

Economists say Las Vegas is on the road to recovery but the home building industry is years away from returning to any sense of normalcy, housing analyst Dennis Smith of Home Builders Research said Monday.

Just looking at the levels of new home sales since 1995 should dismiss any “delusion” of how the industry has changed, he said.

Smith counted 374 new home sales in December, bringing the total for 2011 to 3,894, the lowest number since he began tracking the market 23 years ago. New home sales topped 20,000 in 1998 and peaked at nearly 39,000 in 2005.

“It’s not good from the perspective of where it once was,” Smith said. “The good is that I really feel 2011 is the worst year in terms of sales. The worst is past us.”

Where does the market go from here?

Not too far, Smith said in predicting about 4,000 new home sales this year and 4,200 in 2013.

It’s all keyed to resale price and home equity, he said. Most Las Vegas homeowners are “stuck” owing more than their home is worth, making a move difficult or impossible, the analyst said.

“They have issues to deal with, but once that dam breaks, I’ll be interested to see how lenders react because there will be demand,” Smith said. “Will rates go up? Will lenders go back to making lending easier for people?”

The median price of a new home in December was $121,250, a decrease of $5,830, or 2.7 percent, from a year ago, Home Builders Research reported.

For resales, 2011 was a fantastic year, with 48,822 sales of existing homes — the fourth-highest on record.

Smith tallied 64,168 existing home sales in 2004, 58,522 in 2005 and 49,792 in 2003. The median resale price declined 7.6 percent to $110,000 in December. It has bounced around that price for the last eight months.

Prices are still falling, though no longer “free falling,” and sales volume has recovered nicely in the existing home market, said Larry Murphy of Las Vegas-based SalesTraq.

He reported 3,793 new home sales in 2011, a 30 percent decrease from the previous year. Median price fell 3 percent, to $200,184. Existing home sales increased 15 percent to 58,778, while the median price fell 11 percent, to $105,714.

“Recovery is a long way off, but the worst of it is now behind us,” Murphy said.

He said his biggest concern right now is that three-fourths of homes sold in 2011 were distress sales, either foreclosures or short sales, and a majority of those were vacant.

Also, two-thirds of homeowners with a mortgage are “underwater,” and another 100,000 homes will likely be foreclosed upon in the next few years.

“At the present rate, when this housing crises is over in about four more years, nearly one-third of all homes in Las Vegas will have been foreclosed upon. That is a staggering number,” Murphy said.

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