What a difference a year makes for the new-home market in Las Vegas as 2024 has gotten off to a strong start for builders as lower mortgage rates brought more buyers off the sidelines.
Las Vegas-based Home Builders Research President Andrew Smith reported there were 1,063 net sales (sales minus cancellations) in January as “local builders opened the year on a strong note.” The new-home market is on par on how 2022 started with 1,090 net sales before rising mortgage rates in the second quarter of 2022 dramatically slowed sales, Smith said.
In January 2023, there were only 661 sales, the fewest net sales in a January since 2016. Sales reported so far in February, which is traditionally a stronger month than January, were also strong with one sale per community per week — slightly down from January, Smith said.
When it comes to closings, a lagging indicator to net sales, there were 778 new home closings in January, a 24 percent increase from January 2023. This was the highest January total since 2008 when there was 881, Smith said.
How the year will progress remains uncertain because mortgage rates started to rise in the last few weeks, he added. Freddie Mac this week reported a 30-year-fixed rate of 6.9 percent after falling to 6.6 percent in mid-January after peaking at 7.79 percent in late October.
“Sales have been good with rates going down and that shows how much the interest rates had to do with the major lack of activity going on for a long time,” Smith said. “We will see if that happens again. We are still a ways away from 7.8 percent where it maxed out in October.”
Smith said while the rising mortgage rates had an impact two years ago people are monitoring with the expectation the Federal Reserve will cut interest rates at some point this year, which will ultimately lower mortgage rates.
“They are still well below where they were, and I think the builders have adapted well in dealing with it in terms of buying down rates,” Smith said. “I think it seems OK for now, but we will see.”
Builders are ramping up for the demand they see in the marketplace. There were 1,174 permits issued in January, some 133 percent higher than January 2023, Smith said. That breaks down to 30 percent of the permits issued in the northwest valley, 24 percent in the southwest valley, 21 percent in Henderson and 14 percent in North Las Vegas.
“The northwest sub-market area continues to grow as the major master-planned communities there — Summerlin West, Skye Canyon, Skye Hills, Sunstone — keep going strong, as well as the recent expansion of development to Kyle Canyon Road and multiple smaller infill projects,” Smith said.
At the International Builders Show this week at the Las Vegas Convention Center, Robert Dietz, the chief economist of the National Association of Home Builders held a press briefing in which he forecast an improved nationwide housing market in 2024 after going through what “felt like a recession” in 2022 and most of 2023.
The NAHB is forecasting a 5 percent increase in single-family home starts in 2024 compared to 2023 and even further gains in 2025. Dietz is expecting the 30-year rate will be just below 6 percent in 2025 that should further boost demand.
Affordability is expected to continue to be an issue nationwide as it is in Las Vegas and like Las Vegas new-home sales have been faring better than existing home sales, which have been hampered by homeowners unwilling to put their homes on the market and trade their low interest rate for a higher one, economists said.
Home Builders Research reported 13 new product lines opening for sale in January that brought more than 1,000 lots to the market. Pulte Group accounted for four of these, including three options in the high-end Ascension community in south Summerlin, which they share with Toll Brothers who brought three product lines of their own to market in October, Smith said.
Of the 13, two were attached products — Crestview at Kyle Pointe from Tri Pointe Homes in the northwest and Juno Pointe from D.R. Horton. Juno is one of the final remaining parcels in the Valley Vista master-planned community in North Las Vegas, Smith said.
Lennar was January’s top-selling builder with 213 net sales led by 19 at Dalton, a single-family residential community that opened in March 2021 featuring base prices averaging just under $450,000, Smith said.
The top-selling single-family community in January was Paldona by Pulte Group in the southwest valley.
Smith reported there were 576 single-family closings in January, 18 percent more than a year ago. Attached products closed 202 units, 45 percent higher than in January 2023. Market share for attached new-home products in January was 26 percent, he added.
Smith cites Clark County data as showing 23 percent of new home closings in January were cash deals, the most since July. Of those using financing, the average loan amount was $431,865.
That contrasts to 35 percent of resale home closings in January done with cash. Of those using financing, the average loan
amount was $383,283, Smith said.
The largest loan for a new home closing in January was $2.56 million by City National Bank for a home in the SkyVu community in MacDonald Highlands from Christopher Homes, Smith said.
Smith said the largest loan for a resale home closing in January was $4.25 million by Farmers & Merchants Bank for a condo in the Waldorf Astoria on the Strip.
January prices edged up slightly for single-family homes and even more for attached homes.
Home Builders Research reported the price for single-family homes was $504,470, a 1 percent increase. For attached product types, the January 2024 new home median closing price was $379,990, 6 percent higher than January 2023, Smith noted.
