New home sales rise, but prices still below 2011

The Southern Nevada housing statistics in September displayed increases, declines and some stability, according to a new report from Las Vegas-based Home Builders Research Inc.

The region posted 591 new home sales last month up about 46 percent from 405 sales in September 2011, the report said. But the median sales price for new homes last month was $199,743, down 3.3 percent from $206,480 a year earlier.

Last month, 440 new home permits were pulled. The four-page report noted that it brings the number of permits pulled for the first nine months to 4,451, a year-to-year increase of 53 percent. Dennis Smith, president of Home Builders Research, expects 5,700 to 5,900 permits for 2012.

"Anytime we can report an annual 53 percent rise in building permits, it is great news," Smith wrote in a report issued earlier this week. "That would suggest a very good year for home builders and subcontractors."

Smith cautioned that there could be fewer permits issued next year, saying there is a "lack of finished or partially finished lots."

"There just are not enough finished lots to replace the sold out subdivisions," he said.

The existing home market last month recorded 3,544 transactions, raising the total for 2012 to 37,498, a year-to-year increase of 1,670, or 5 percent.

Across the nation, U.S. builders started construction on homes in September at the fastest rate since July 2008 and made plans to build even more homes in the coming months. The gains show that the housing recovery is strengthening and could help the economy grow.

The Commerce Department said Wednesday that home construction rose 15 percent last month to a seasonally adjusted annual rate of 872,000. Single-family construction rose 11 percent to the fastest rate in four years. Apartment building increased 25.1 percent.

Applications for building permits, a sign of future construction, jumped nearly 12 percent to an annual rate of 894,000, also the highest since July 2008.

"If there was any doubt that the housing market was undergoing a recovery, even a modest one in the face of the terrible 2008 decline, those doubts should be erased by now," said Dan Greenhaus, chief global strategist at BTIG.

The construction rate has increased by more than 38 percent over the past 12 months.

Housing starts are now 82.5 percent above the recession low rate of 478,000 hit in April 2009. That's still well short of the 1.5 million that economists consider healthy and far below the more than 2 million built in 2007 - the peak of the housing boom. But the steady upward trend suggests that builders believe the housing rebound is durable.

"This is a good report," said Patrick Newport, U.S. economist at HIS Global Insight. "It is telling us that the housing market is improving and there is no reason to think that this will not continue going forward."

Newport said housing starts should total 750,000 for the year. He expects starts will climb to 950,000 next year and 1.27 million in 2014. By 2015, he said home construction should reach more than 1.5 million.

He also predicts that housing will add about 0.25 percent to overall economic growth this year. If that forecast proves accurate, it will be the first year that housing has been a positive factor for economic growth in five years.

"The rest of the economy is still struggling but housing is doing better because as the population grows, we need new houses to meet that demand," Newport said.

Though new homes represent less than 20 percent of the housing sales market, they have an outsize impact on the economy. Each home built creates an average of three jobs for a year and generates about $90,000 in tax revenue, according to data from the home builders group.

Construction activity rose in three of the nation's four regions. The biggest increases came in the West and South. Housing starts increased by nearly 20 percent in both regions.
Construction of new homes and apartments rose 6.7 percent in the Midwest. Housing starts fell 5.1 percent in the Northeast.

The Associated Press contributed to this report. Contact reporter Chris Sieroty at csieroty@reviewjournal.com or 702-477-3893.