New-home sales rise 37 percent in Las Vegas

With sluggish year-ago comparisons, new-home sales increased 37 percent in the first quarter as buyers took advantage of the tax credit that expires at the end of this month, a local housing analyst said Thursday.

Traffic through sales offices at new-home subdivisions in Las Vegas has declined 31 percent, yet sales per subdivision steadily picked up to one a week in March after bottoming out at 0.1 to 0.2 a week during the holiday season, Dennis Smith of Las Vegas-based Home Builders Research reported.

He counted 474 new-home building permits in February, the highest number in 12 months. There were 139 permits in the same month a year ago.

Smith said builders aren't concerned about having excess inventory when the tax credit expires because they've been prudent in not building houses on speculation, or without a sales contract.

"I don't see a problem with inventory," he said. "If anything, we might see a few houses left over by cancellation and they'll be gone in 60 days."

Appraisers and underwriters need to understand that Las Vegas is no longer a declining housing market, Smith said. Some neighborhoods may be in decline with a higher number of foreclosures, but that can change from week to week, he said.

Foreclosures peaked at 3,076 in August, but dropped to about 2,500 a month over the past six months and fell to 1,500 in March.

"We're not going to suggest they're going to continue to go down without knowing the effect of the shadow inventory," Smith said in reference to the estimated 40,000 to 50,000 bank-owned homes being held from the market.

"I've had discussions with (bank) lawyers and they assured me lenders are very close to releasing 1,000 a month. We read where Bank of America was going to release 500 a month. That hasn't happened yet. I've got to see it first to know how to measure it," he said.

Median sales price and average price per square foot have remained fairly steady since April 2009, the housing analyst said. The average resale price is $79.19 a square foot, down just 65 cents from a year ago. New-home prices have gone up to $112 a square foot, compared with $108 a year ago.

Smith said finished residential lot prices have gone up to $40,000 to $50,000, compared with $25,000 to $35,000 a year ago. A finished lot has to be ready for a building permit, hooked up with both wet and dry utilities and graded with curbs and streets.

He estimated there are 17,500 finished lots in the Las Vegas Valley, including 6,789 in the southwest submarket.

About 72 percent of those lots are builder-controlled, meaning they're probably not for sale, Smith said. They may be sold from one builder to another. Most investors are buying lots not to flip for a quick profit, but to hold for two to three years, even five years.

"There aren't many finished lots in good locations," Smith said. "The supply is very tight for what I call A-minus lots. I want to emphasize that the location of these lots is very important to pricing."

Paul Harris, president of Residential Capital Mortgage Corp. in Henderson, said homebuyers must sign a sales contract by April 30 and close escrow by June 30 to qualify for the tax credit.

"We are experiencing tremendously high volume and our turn time has slowed down," Harris said. "Some underwriting turn times are past two weeks. Title companies are backed up. That could possibly delay closings over the next 60 days."

The good news is buyers are looking at interest rates between 5 percent and 5.5 percent, though Harris said he thinks they will start increasing toward the end of the year.

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