Lowering interest rates boost home sales; builders pull more permits

Updated April 23, 2024 - 10:45 am

The Las Vegas area reported its best February for new home closings since 2007 as falling mortgage rates continue to boost buying, and as a result, builders are showing their confidence in the market by pulling a greater number of permits and buying land.

Las Vegas-based Home Builders Research President Andrew Smith reported 1,110 new home closings in February, a 42 percent increase from February 2023. That’s the highest February total since 2007, when there were 1,427 closings — the last time there were more than 1,000 new home closings in every month of the year, Smith said.

The 2024 total closing of 1,888 is 31 percent higher than the first two months of 2023. There were 823 single-family detached closings in February, 29 percent more than a year ago. The 2024 total sits at 1,399, 25 percent higher than 2023 through the first two months, Smith said.

Attached products closed 287 units, 67 percent higher than in February 2023. The 2024 total of 489 is 57 percent higher than 2023 through February, Smith said.

Closings are a lagging indicator of sales, but the new home market shows no signs of slowing as builders had more than 1,000 (1,042) net sales homes — sales minus cancellations — for the second consecutive month after only three such months of more than 1,000 in 2023.

The new-home market is getting off to the same first quarter start it did in 2022 before rising interest rates curtailed the market for the rest of the year and into 2023.

There were 2,105 net sales in January and February, up from 1,535 in the first two months of 2023.

Smith said net sales are running 5 percent higher than 2022, and that’s happening despite buyer traffic down 20 percent from January and February 2022.

Smith pointed to declining mortgage rates over the past month after reaching 7.79 percent in October. The 30-year fixed mortgage rates have ranged from 6.6 percent in January to 6.87 percent this past week. It was 6.74 percent last week.

Builders are bolstered by the rising sales. Builders took out 1,023 permits in February, 42 percent higher than February 2023. The 2024 total of 2,196 is a 79 percent year-to-year increase from 2023 through February, Smith said.

LGI Homes pulled a dozen permits in their 100-lot Tropicana Gardens community in the east valley. The southwest sub-market area and North Las Vegas also saw a month-to-month increase in residential permits pulled, Smith said.

The new-home market share in overall closings in February 2024 remained at 22 percent for the second straight month, which Smith said has seen a 4 percent drop from the 2023 average despite resale listings without offers remaining low. Market share for attached new-home products in January was 26 percent for the second straight month, he said.

Home Builders Research reported seven new product lines opened for sale in February, bringing more than 450 lots into the market. Lennar accounted for three, including Braydon in the northwest, Rochelle Estates in the south submarket area and Hampton in the Cadence master-planned community in Henderson. Southridge Pointe from Tri Pointe Homes in the southwest valley is offering attached products, Smith said.

Lennar led the way among builders in February with 171 net sales. Centennial Heights had 17 net sales in the town home community in the northwest’s Skye Hills master-planned community, which opened in January 2022. It has averaged over eight net sales per month, Smith said.

The top-selling single community for the month was Independence by Touchstone Living, which opened in the east valley in October and has averaged more than 13 net sales per month, Smith said.

The median new home closing price for all product types in February was $480,097, a 0.4 percent increase from February 2023. The median new home closing price for single-family detached products was $509,824, up 3 percent from February 2023. For attached product types, the February 2024 new home median closing price was $376,990, 2 percent higher than February 2023, according to Home Builders Research.

Smith said February was more active than he has seen over the past couple of years as five major builders added vacant land parcels to their portfolios. Lennar picked up nearly 12 acres in the southwest. KB Home added 4 acres north of Kyle Canyon Road next to their Talus project. Beazer Homes added more than 12 acres across four different transactions, and Richmond American acquired nearly 5 acres adjacent to their Pewter Valley communities.

Some 17 percent of new home closings in February were done with cash.

Of those using financing, Smith said the average loan amount was $419,421. The largest loan for a new home closing in February was $1.3 million by Digital Federal Credit Union for a home in the Arches community from Lennar in Summerlin. The three home loans in February were all for homes in The Arches, Smith said.

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