Rebounding from a poor start to 2020, KB Home came out on top in the midyear rankings for home closings among Las Vegas builders in a marketplace still characterized as hot and on pace to have its most sales since 2007.
While new home net sales fell for the third straight month in June and below 1,000 (935) for the first time in 2021, Home Builders Research President Andrew Smith said the “market remains hot though perhaps not as hot as it has been over the previous nine months.”
There have been 7,348 net sales — sales minus cancellations — through the first half of 2021, a gain of 46 percent over the first half of 2020. There were 11,059 net sales in 2020 — the most since the 12,596 in 2007.
“The first half of 2021 shows impressive year-over-year gains in basically all major metrics in the new home segment as could be expected with the second quarter of 2020’s pandemic affected totals,” Smith said.
Smith said every time he reports a couple of weeks of declining sales totals, it seems the following week registers a substantial increase back near the levels seen consistently over the previous three quarters.
“We have still not seen more than three straight weeks of decreasing new home net sales since the pandemic hit in March 2020,” Smith said. And though buyer traffic steadily decreased throughout the second quarter, we are still reporting weekly totals at levels similar to the last three quarters of 2020.”
Smith said a pullback in sales that has shown up doesn’t mean the demand isn’t there. Some builders are holding back lots for sale to meet better delivery time goals and to avoid getting hit hard by signing contracts, only to be stuck with large price increases for materials by the time it’s built and delivered.
That was echoed by Nat Hodgson, CEO of the Southern Nevada Home Builders Association. He said the industry continues to deal with a shortage of materials, shortage of labor, rising material prices that makes it difficult for builders. The good news is there are plenty of buyers, and he doesn’t see that slowing down anytime soon, especially with the influx of people from California, he said.
Las Vegas will have its best year since 2007, but Hodgson said based on demand they could build 20,000 homes if builders had the materials and labor. Sales have slowed only by design, Hodgson said.
“We had to stop selling so far out,” Hodgson said. “You can’t sell a house if you’re not starting for 18 months. It’s not fair to the builders. It’s not fair to the homebuyers. Why sell a house that you can’t build in six months and take a risk of it costing you $60,000 more.”
Builder land purchases continue at a strong pace despite ever increasing prices in an effort to meet buyer demand going into the second half of 2021 and into 2022, Smith said.
“Many continue to wonder if the recent slowing of new home sales activity in Southern Nevada (and nationwide) is a worrisome trend or simply a bit of a “bringing back down to earth” situation,” Smith said. “We tend to lean toward the latter.”
New home prices are increasing across the board, but Smith said the median new home price of all closing in the first six months of 2021 was only 5.4 percent higher than the first half of 2020. That’s despite the substantial increase in material prices and fees homebuilders have faced, he said.
In June, the median new home price was $411,418, an 8.6 percent increase of June 2020.
“New home base asking prices continue to rise throughout Southern Nevada, though slightly slower and less frequently for some builders recently,” Smith said. “Despite an increase in attached product types in the market, homes over $400,000 are accounting for a much larger portion of total sales in 2021.”
The percentage of homes built in 2021 more than $400,000 has grown to 30.3 percent, up from 23 percent in 2020.
Homes priced under $300,000 accounted for 39.2 percent in 2021, down from 46.7 percent in 2020, according to Home Builders Research.
KB Home, which was ranked No. 4 after the first six months of 2020, recorded 1,308 net sales in the first six months of 2021, far outpacing No. 2 Lennar Homes with 1,086, according to statistics compiled by Home Builders Research.
■ KB’s 1,308 closings were 106 percent higher than the 634 in the first six months of 2020. No builder in Las Vegas took a bigger hit during the initial stages of the COVID-19 pandemic.
■ In placing second, Lennar’s 1,086 sales were 54 percent higher than the 704 in January to June 2020 when it held the No. 1 ranking at midyear.
■ No. 3 on the list is Pulte Homes with 841 sales, a 22 percent increase over the 689 sales in 2020 when it was ranked No. 3.
■ D.R. Horton, the developer of Valley Vista in North Las Vegas that held the No. 1 ranking in midyear 2020, recorded one of the few declines among the top builders. It had 620 sales in 2021, 15.5 percent fewer than the 734 in 2020, falling to the fourth position in the ranking.
■ No. 5 is Century Communities, the other big builder to record a decline. It had 559 sales, down 22 percent from 411 in 2020. It was ranked No. 6 in 2020.
■ Coming in at No. 6 is Richmond American with 546 sales, a 9 percent gain over the 502 sales in 2020.
■ Tri Pointe, previously known as Pardee Homes, had 429 sales, 59 percent higher than the 270 in 2020. It is No. 7.
■ No. 8 is Touchstone Living with 377 sales, a 328 percent increase over the 88 sales in 2020.
■ No. 9 is Toll Brothers with 345 sales, a 145 percent increase over the 141 sales in 2020. The national homebuilder recently purchased Las Vegas-based StoryBook Homes.
■ No. 10 is Beazer Homes with 312 sales, 3 percent higher than the 304 sales in 2020.
■ Taylor Morrison, which was ranked No. 10 after the first quarter, fell just outside the top 10. It had 297 net sales, seven out of the top 10.
Smith said most of this list had year-over-year increases due to the timing of the pandemic that slowed sales.
The one exception is Touchstone Living, which reported an increase of more than 300 percent that had to do with the opening of one of its communities, Mosaic, in March 2020 at the start of the pandemic.
Smith said the two builders that had declines were also the victims of timing. D.R. Horton, for example, with its Valley Vista saw a decline because of strong sales and subdivisions closing out. The builder hasn’t yet added additional projects with similarly large numbers of home sites, he said.
“Given their recent activity in the land market though, that will be changing sooner rather than later,” Smith said.
Smith said in his latest land report that D.R. Horton has made a big play to acquire land in the northern portion of the Villages at Tule Springs in North Las Vegas.
As for Century Communities’ decline, Smith said the builder opened four product lines in its Craig Ranch community in January 2020, and that has been successful. The builders, however, have not replenished those larger lot counts to make up for that success, he said.
“Given that they now own and operate the Skye Canyon, they will certainly be adding to their lot inventory by the end of the year,” Smith said.
North Las Vegas continued to lead the way in home construction with 25 percent of the marketplace. It is down from 27 percent from the first six months of 2020.
The southwest valley edged up to 24 percent in 2021, up from 23 percent in 2020. Henderson had 21 percent of the sales, up from 20 percent in 2020. The northwest valley had 20 percent, the same as in 2020.
Top 10 master plans
Summerlin came in first in net sales for master plans in the first six months with 932, according to Home Builders Research.
Valley Vista in north Las Vegas was second with 574; Inspirada in west Henderson was third with 445; Cadence in east Henderson was fourth with 443; Skye Canyon in the northwest valley was fifth with 390; Villages at Tule Springs in North Las Vegas was sixth with 258; Lake Las Vegas was seventh with 236; Southern Highlands was eighth with 40; Mountain’s Edge was nine with 32; and Rhodes Ranch was No. 10 with 9 net sales.