Representatives of the Las Vegas housing industry got a briefing Thursday that showed net sales and buyer traffic have rebounded slightly after a steep decline following the shutdown of the casino industry and other non-essential businesses in March due to COVID-19.
The Las Vegas housing market was in a good spot before the virus hit and Gov. Steve Sisolak declared a state of emergency on March 12. Overall, since March 12, weekly traffic is down 66 percent and net sales are down 55 percent, according to the Home Builders Research report.
“If we just look at April, we have 53 per week,” said Home Builders Research President Andrew Smith who hosted the webinar sponsored by Southwest Gas. “That’s hard to say.”
Smith said Southern Nevada ended the first quarter with 3,113 net sales — sales minus cancellations — 20 percent higher than the 2,584 in the first quarter of 2019. There were 3,185 net sales in the strong first quarter of 2018.
Smith described how Southern Nevada reached a 2020 high of 329 net sales during the week ending March 8. Net sales fell 21 percent to 260 on March 15, fell to 182 on March 22, dropped to 92 on March 29 and hit a low of 38 on April 5.
“That was the first time we reported four straight weeks of 20 percent or more drop off in sales since 1999,” Smith said. “That’s pretty humbling.”
Smith said, however, the 38 sales for the week ending April 5 wasn’t even in the top 10 fewest weekly net sales they’ve tracked but was the lowest during the spring. The other low weekly numbers were in December and January, he said.
That decline changed during the week ending April 12 when net sales rose to 49. The following week ending April 19 net sales rose to 82.
The increase in sales coincides with a boost in traffic at builder models after a steep decline following the shutdown. Builders, who are doing virtual tours more than ever, are allowed by orders by Sisolak to show models in-person by appointment only.
The high traffic this year was 6,073 for the week ending Feb. 16. It has steadily declined since with a steep drop off of 66 percent to 1,361 during the week ending March 22, the same week Sisolak ordered a mandatory shutdown of nonessential businesses in Nevada.
The weekly traffic fell to 963 ending March 29. It then rose to 1,003, fell to 826 and jumped 55 percent to 1,277 in the week ending April 19, Smith said.
These are some of the lowest traffic levels since 1999, he said.
“It now seems buyers and builders are adapting to what they have to do,” Smith said. “There’s adaption happening and buyers that are looking are serious and figuring how to get things done.”
Cancellations of sales have also come down after a steep increase, Smith said.
The cancellation rate was 7.8 percent during the week ending March 8. It rose to 23.8 by March 22 and 60 percent on April 5 — the fourth highest ever recorded and highest week that doesn’t fall in winter, Smith said. Subsequently, the cancellation rate fell to 34.4 by April 19.
“Listening to builders it seems like those initial cancellations were people who had just lost their jobs and early on in the buying process,” Smith said. “The ones further along are still closing their homes for the most part.”
Smith said the COVID-19 outbreak has had the biggest impact on higher-priced new home sales.
Those new production homes of $750,000 and above have seen their weekly sales go from nine a week prior to March 12 to one afterward.
In the $500,000 to $750,000 category, weekly sales went from 24 to eight. They went from 43 to 22 in the $400,000 to $500,000 category. The $200,000 to $300,000 price range fared the best with sales only falling from 55 to 40 a week. The $300,000 to $400,000 price range had 46 sales but was averaging 125 sales a week prior to that.
“This one was a little bit surprising to me and maybe I was wrong in the way I was thinking at the start,” Smith said. “My initial thinking was the higher price ranges would not be affected,” Smith said. “Theoretically those buyers are more financially secure and if they’re interested in buying a new home they will do it anyway. That is not what the numbers show.”
