Las Vegas Sun

March 28, 2024

LV home resales decline, but rebound expected

Despite the November decline in sales of existing single-family homes in Las Vegas and nationwide, sales of resale homes are on track for a record year, analysts said.

Existing-home sales declined 3.5 percent to a seasonally adjusted annual rate of 5.56 million units in November, from a pace of 5.76 million units in October, the fourth-highest pace on record, the National Association of Realtors reported Monday.

While November's sales of existing homes dipped slightly, they were still 5.9 percent above the 5.25-million unit level in November 2001, the association reported.

Some correction from the near-record levels was expected, said David Lereah, the association's chief economist.

"Our projections indicate existing-home sales should be fluctuating at a pace in the range of 5.2 to 5.4 million for the coming year, so it's no surprise to see sales coming off the spike in October," he said.

In Las Vegas, there were 2,865 recorded existing-home sales, 675 fewer recorded sales, or closings, compared to October, said Las Vegas researcher Dennis Smith, president of Home Builders Research Inc.

Pete Dunlap, sales manager with Fidelity National Title, said the Las Vegas office saw a 12 percent fall in resale home business in November.

"From October to November there was a definite drop off," he said.

There have been 35,202 recorded existing home sales through November in the Las Vegas area, compared to 31,708 recorded sales of existing homes through November 2001, an increase of 11 percent, Smith said.

"As long as interest rates remain low, the resale market will continue to do well," Smith said.

Nationwide, sales are expected to top 5.5 million sales of existing homes, compared to 5.3 million sales in 2001, the Realtors association reported.

Low mortgage rates helped fuel home sales throughout the year, despite the weak economy.

The national average commitment rate for a 30-year, conventional, fixed-rate mortgage was a record low 6.07 percent in November, down from 6.11 percent in October, according to Freddie Mac. Freddie Mac is a stockholder-owned corporation established by Congress in 1970 to support home ownership and rental housing.

The dip in existing home sales in Las Vegas and nationwide was not unexpected, Smith said.

November generally tends to be a slow month for housing sales, he said.

Look for another peak in home sales in December, he said.

"Sometimes in December you'll see an increase in end of the year activity," Smith said. "People want to get the process taken care of before the end of the year for tax reasons."

Virginia Alton, a buyer's broker with the Cathy Bittinger Team in Las Vegas, said the last three months have been strong for her.

"For new homes, people have to wait six months, so people are buying resale homes," she said.

Some buyers are purchasing existing homes as an investment, Alton said.

"What people are saying is they are not investing in stock, they are investing in real estate and it's a much safer bet," she said.

The median price of a resale home continues to increase. Smith expects the median price of an existing home in Las Vegas to hit $167,500 by the end of 2003.

The median price of a resale home in Las Vegas at the end of the third quarter was $163,200, a 7.5 percent increase over 2001, according to the National Association of Realtors.

The national median existing-home price was $161,400 in November, up 9.7 percent from November 2001 when the median price was $147,100.

By the end of 2003, resale homes should account for 65 percent of all housing transactions in Las Vegas, Smith said. In 1995, existing-home sales accounted for 44 percent of sales, Smith said.

Smith said the rise in the resale market is a direct result of the growth in Las Vegas' housing stock. The rising prices of new homes have driven some consumers to consider resale homes because of the lower prices, Smith said.

"The increase is more in tune to what the national trend is," he said. "That's just a signal the market has gotten to a size where it's maturing.

"It's comparable to other major metropolitan areas."

Dunlap, with Fidelity National Title, said he has seen an increase in the resale-home business over the last three years, and expects this year to be no different.

The slight dip in existing-home sales was offset by the government's report last week that nationwide sales of new single-family homes in November climbed to their highest monthly level on record.

The Commerce Department reported that sales of new single-family homes climbed to a seasonally adjusted annual rate of 1.07 million in November, representing a 5.7 percent increase from October's level.

In Las Vegas, new home sales did drop slightly in November, by 505 sales, or 2.45 percent, according to Home Builder's Research.

Regionally, existing homes in the West were selling at an annual rate of 1.50 million units in November, the same as October, but the pace was 12.8 percent higher than November 2001, the National Association of Realtors reported. The median existing home price in the West was $215,000, up almost 12 percent from November 2001.

Existing home sales in the Midwest slipped 3.9 percent in November to an annual rate of 1.22 million units, but were 3.4 percent above a year ago. The median price of an existing home in the Midwest was $138,000, up almost 12 percent from November 2001, the association reported.

The home resale pace in the South declined 4.8 percent in November to an annual rate of 2.20 million units, but was 4.3 percent above November 2001. The median price of an existing home in the South was $151,100, which was 8.2 percent higher than a year ago, according to the association.

Existing home sales in the Northeast fell almost 10 percent in November, to a pace of 640,000 units, but were 1.6 percent higher than a year ago, the association reported. The median existing-home price in the Northeast was $172,00, up 13.5 percent from November 2001, according to the association.

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