Despite new-home sales down 39 percent from where they were at this time in 2022 because of elevated mortgage rates, Las Vegas area builders posted their best net sales numbers since June as they continue to slow price increases, according to Home Builders Research President Andrew Smith.
Calling it a “few glimmers of light shining through fog,” Smith said that while the year-over-year stats should look dismal through the first quarter of 2023 in part because the first quarter of 2022 was so strong, there has been “steady positive movement” since the start of the year.
Smith reported that 661 new home net sales — sales minus cancellations — between December and January represented an increase by 59 percent but was down 39 percent compared with January 2022. It was aided by a sharp decline in cancellations, which was below historical averages.
The weekly cancellation rate surpassed 50 percent in late November but hovered below 20 percent in January, Smith said.
“New home net sales finished January with the highest total we have reported since June 2022 and increased for the third straight month,” Smith said. “It was, however, still the lowest January net sales total we have reported since 579 in 2016. Positive signs point to improving sales through the first quarter.”
Among those positive signs is subdivision traffic increasing, Smith added. During the fall, the average traffic hovered between eight and 10 prospective buyers a week and has been reaching 14 a week in February, Smith said. Net sales hovered between 0.3 and 0.4 a week during the fall and approached one sale per subdivision a week by the end of January, and that continued into February.
“The upward trend starting at the beginning of the year is rather dramatic compared with the middling performance reported through the third and fourth quarters of 2022,” Smith said. “Historically, our benchmark for an average sales week has been 0.7 net sales per subdivision. We see that the market exceeded that level at the end of January for the first time since last May, and that performance has continued into February.”
Smith said after peaking in late May 2022, the number of active new home subdivisions has been shrinking slowly, down nearly 10 percent since then. Four new home communities opened in January with 407 lots, Smith said.
Beazer Homes has 21 lots in Arden Heights in Henderson with average base price per home of $437,000 and home size just over 2,000 square feet.
Century Communities has 81 lots at The Bluffs II in Lake Las Vegas with an average home size of 2,100 square feet and base price of $498,000.
D.R. Horton has 23 lots in Water Falls in the southwest valley where the average home size is 2,550 square feet and base price is $471,000.
Lennar has Highpointe at BMR in Henderson with 282 lots. The average home size is 1,800 square feet and base price is $399,000.
Smith previously noted that builders started decreasing base prices in the middle of 2022. Over the past month or two, some builders have begun to “inch back up slightly” while most are standing pat, he said.
Some 48 percent of sales in January were between $400,000 and $499,999 — up from 40 percent in January 2022, Smith said.
“While base price increases have certainly softened and most price adjustments over the past few months have been in the other direction, we can see that there were zero new home communities in Southern Nevada with an average base price under $300,000 reporting any sales to start 2023,” Smith said.
Summit Homes had the biggest decrease in price between December and January at 10 percent, Smith said. They were followed by Storybook Homes with a 4.4 percent decline and Tri Pointe Homes with a 4.4 percent decrease.
D.R. Horton had a 1 percent increase in price; Taylor Morrison, up 1.3 percent; and Signature Homes, up 1.7 percent.
The median new home closing price for all product types was $467,411 in January, a 2 percent increase from January 2022, Smith said.
The median new home closing price for single-family detached products was $499,750, a 4 percent year-to-year increase from January 2022. That was after seven straight months coming in over the $500,000 mark, Smith said.
For attached-product types, the January new home median closing price was $356,990, 2 percent higher than January 2022, Smith said.
“The new home median closing prices for both detached and attached products dipped month-to-month in January while the overall number jumped up slightly,” Smith said.
“The year-over-year change was just 1.7 percent, dramatically different from the 15 percent to 20 percent appreciation witnessed throughout last year.”
The 503 new home permits were 64 percent lower compared with January 2022 but were up from December, Smith said. That was the lowest January permit total since there were 511 in 2016, he said.
Smith said builders continue to work through the homes started during first and second quarters of 2022 when they were straining to keep up with demand. The low permit totals will continue in the short term, he added.
As cited previously, the distribution of new homes being built continues to be centered in Henderson and the southwest with North Las Vegas continuing to lose market share, Smith said. Some 36 percent of the permits issued were in Henderson while 28 percent were in the southwest valley. North Las Vegas made up 11 percent. The northwest valley had 16 percent of the permits.
“The distribution of new home net sales by area shifted a bit in January from what we saw in 2022,” Smith said. “The dramatic decrease in activity in North Las Vegas that began in the second half of last year stands out, as well as the resurgence of the southwest with new areas of development ramping up.”