As Summerlin and Inspirada led the way in master plan sales during the first quarter, a research firm Thursday projected that with interest rates steadying, Southern Nevada new home closings will finish the year 3 to 5 percent higher than 2018.
Andrew Smith, president of Home Builders Research, told a group of builders at Springs Preserve that while new home closings were 4.6 percent below the first quarter of 2018 – one of the strongest since the Great Recession – they are 12 percent higher than 2017’s first three months.
In January, Home Builders Research said new home closings would fall about 5 percent in 2019 after steep decline in the fall when interest rates reached 5 percent. The 30-year fixed rate has since fallen between 4.25 and 4.35 percent.
“We have growing population, job numbers are strong and in speaking with builders and contractors they’re not seeing a slowdown,” Smith said. “It’s unrealistic to get any higher than we are right now for the time being but we’re fairly steady.”
There were 10,669 closings in 2018, a 14.2 percent gain over 2017.
“In 2018 we got superhot, pretty quick and that was surprisingly strong before taking a dive all the way to the end,” Smith said. “This year so far we’ve jumped up fairly quickly. While 2019’s numbers haven’t been as high year-over-year, they seem to be relatively steady and a better than expected based on what was happening in December when sales were slow. Hopefully, we see a little more of the 2017 behavior of steady growth with interest rates looking like they will stay constant.”
Summerlin and Inspirada led the way in master plan net sales during the first quarter of 2019, according to data released by Home Builders Research. Net sales for the quarter overall were down 19 percent compared to a robust 2018 but similar to 2017.
Some 55 percent of the net sales during the first quarter were in master-planned communities. Net sales are contracts minus cancellations.
Summerlin reported 333 net sales during the first quarter, a decline of 18 percent over the 407 in the first quarter of 2018.
Coming in second was Inspirada in Henderson with 172 net sales, a 36 percent decline from the 267 in the first quarter of 2018.
Cadence in Henderson was third with 161 net sales, a 17 percent decline from 193 sales in the first quarter of 2018.
Skye Canyon was fourth with 129 net sales. That’s a 15 percent increase over the 112 sales in the first three months of 2018. Smith said higher density and lower prices helped boost sales.
The Villages of Tule Springs in North Las Vegas, which wasn’t in the top 10 a year ago, jumped to fifth with 85 net sales, a 204 percent increase after the 28 sales in the first quarter of 2018.
Tied at fifth with 85 net sales was Coronado Ranch, up 29 percent from the 66 sales in the first quarter of 2018.
Highlands Ranch was seventh with 66 sales, down from 97 in 2018.
Sedona Ranch, the former farm site in North Las Vegas, made its debut in eighth place with 56 sales in the first quarter.
Lake Las Vegas with 45, and Tuscany in Henderson with 41 wrapped up the top 10 among valley master plans. Southern Highlands and Mountain’s Edge were 11th and 12, respectively.
The number of new-home communities jumped by 41 percent in 2018, which Smith attributed to the second phase of Skye Canyon, Sedona Ranch, Tule Springs and Valley Vista, once known as Park Highlands East where DR Horton started selling at the beginning of 2019.
North Las Vegas and the northwest valley were the two areas that showed an increase in net sales. There were 436 in North Las Vegas, up from 325 in the first quarter of 2018, a 34 percent gain.
“The new master plans in Tule Springs, Valley Vista and Sedona Ranch are up and running and doing well with more affordable homes and land,” Smith said.
The northwest valley had 548 net sales, three more than in 2018. The firm is unable to track all sales in the east valley but Smith said they’re likely higher because of builders pursuing more affordable housing projects there.
Smith said he was surprised that net sales dropped 26 percent in Henderson but added that might be because 19 percent of the city’s communities have a base asking price of more than $500,000. He said there’s also a 22 percent drop in the number of communities active there.
The southwest valley saw net sales fall from 1,189 a year ago to 727 this year because the number of affordable communities have decreased while higher-priced communities have increased. Four communities have an average base price of more than $500,000, Smith said.
Lennar Homes maintained its top spot in first quarter net home sales in the valley and many of the top 10 spots remained unchanged in 2019.
Lennar reported 447 sales between January and March. They were followed by KB Home with 351; 320 for Richmond American; and 235 for DR Horton.
The top four account for 48 percent of the active communities and 52 percent of the net sales, Smith said.
“We’re very top heavy which is expected because they have more communities,” Smith said. “That could be even more so if some builders combine, rumor has it.”
The others top rankings were 229 for Pulte Homes/Del Webb and 193 for American West Homes.
Smith said what’s surprising about Pulte’s number is Pulte only has 10 active communities but is fifth in volume while others like Lennar, Richmond American and DR Horton have 25 to 30 communities, he said.
“Pulte has been doing very well as its Reverence Heights on the far west side is off the charts,” he said. “There average closing price is more than $800,000, and it’s the third best-selling community in Las Vegas.”
Reverence Heights had 41 net sales in the first quarter, second in the valley behind 42 for Rose Ridge by Lennar. Lennar’s Heritage in Cadence had 41 net sales, while Pulte’s Catalina had 35. DR Horton’s Expressions in North Las Vegas was next with 33 net sales.
Smith said two 55-plus communities in Heritage and Sun City Mesquite with 45 net sales are in the top five.
“That demographic was not being served at all in Vegas five years ago,” Smith said. “Now we got a handful of active-adult communities out there and two coming in the next five years.”
The eight through 10th subdivisions in the top 10 in net sales were attached product — the Hudson in North Las Vegas by Lennar; Groves at Inspirada by KB Home; and Cliffs at Dover town homes by Beazer near Nellis Air Force Base.
Overall, attached product accounted for nearly 14 percent for new home closings during the first quarter. There was a 97 percent increase in 2018 for new attached closings.
It’s been rising since 2015 and reached a one-month high of 169 closings in September 2018, Smith said. The percentage that month was 16.4 percent, he added. He said he wouldn’t be surprised if it reached 20 percent at some point this year or next year.
“As affordability issues have begun to challenge homebuilders and buyers, builders are faced with land, labor and material costs and major part of their strategy has been to attack affordability through density,” Smith said.
KB Home, which has been successful with attached product, is expanding its town home offerings outside of Inspirada in Henderson for the first time, Smith said. It has closed on land in the northwest valley and elsewhere it will have some attached product.
Another site is 19.6 acres from the Howard Hughes Corp. the developer of Summerlin, that KB bought for $13.1 million.
“It is certainly going to be attached product, but it will be interesting to see if it’s something they already have or they will bring out a new product line for this, which they might want to do given the location,” Smith said.
Lennar and Beazer are active in the attached product, Smith said. Richmond American has its first attached product in Cadence in Henderson and averaged nine sales a month in the first quarter. Century Communities has opened town home sales in Tuscany and has seven sales a month in the first quarter. He said Touchstone will be building in that market segment as well.
North Las Vegas has rezoned 85 acres near Deer Springs Way and Losee Road for a Touchstone Living development with a mix of homes, duplexes, four-plexes and six-plexes.
The other top builders during the first quarter include 132 net sales for Century Communities; 131 for Pardee Homes; and 128 for Beazer Homes. Toll Brothers wrapped up the No. 10 spot with 91 net sales.
Woodside Homes fell out of the top 10, going from nine in the first quarter of 2018 to 11th in the first quarter of 2019 with 88 sales.
Woodside was followed by Harmony Homes at No. 12 with 67 sales. The rest of the order was William Lyon Homes with 62; Touchstone Living with 48; Storybook Homes with 28; and Summit Homes with 15.
Harmony, Touchstone and Storybook had some of the biggest gains over the first quarter of 2018.
Smith said Harmony has benefited from affordable pricing with a base asking price of about $250,000. Touchstone has diversified its offerings with more affordable and more communities. Storybook has affordable product as well, excluding its Boulder City offerings. Its base asking price is less than $310,000 outside of Boulder City.
Smith said there will be 3 to 5 percent more building permits issued in 2019, and he expects prices to rise only between 5 percent and 8 percent.
Permits rose 11 percent last year, and the average new home median price rose 9.5 percent. Prices have flattened between June and March by increasing only 1.2 percent, Smith said.
In March, the median closing price was $383,583 for all product types. It was a $398,054 median closing price for single-family homes and for attached was $270,990.
