Median price of new homes falls under $200,000

By Buck Wargo

Tuesday, Dec. 22, 2009 | 11 a.m.

The median price of new homes sold in November dropped under $200,000 for the first time in six years and builders sold the highest number this year, according to statistics released today.

Buyers closed on 598 homes in November, surpassing the previous 2010 high mark of 486 in October, according to Las Vegas-based SalesTraq. That is the highest number of sales since 633 home closings in December 2008 and likely means the region will surpass 5,000 sales in 2009.

Through November, builders have sold 4,667 homes, which is nearly half of the 9,965 homes sold in 2008. Builders sold more than 38,000 homes in 2005 at the peak of the market, SalesTraq reported.

“While it’s much too early to declare the new home market to be in recovery, the trend in the numbers is encouraging,” said SalesTraq President Larry Murphy.

Despite the increase, builders didn’t rush out to take new permits in November. Local governments issued 268 permits in November, the fewest number since March, SalesTraq reported. Builders are on track to take out fewer than 4,000 permits this year.

The new home market has struggled to compete against foreclosures because of the price differential, analysts said. The gap remains wide but is narrowing as prices in the existing home market stabilize and even rise slightly.

The median price of new homes sold in November was $198,466, down more than $6,000 from October and 19 percent since November 2008, SalesTraq reported.

The reason for the price drop is a decrease in the size of the home and cost to build them, Murphy said. The average size of new homes sold in November was 1,876 square feet, down from 1,917 square feet in March. The price per square foot has fallen from $114.64 in March to $105.78 in November, SalesTraq reported.

The average number of sales per subdivision was 2.62 in November, the most since there were 2.72 sales per subdivision in November 2007. SalesTraq reported 228 active subdivisions in November. That is down 61 percent from the peak of the market of 579 in July 2007. The number has dropped nearly 35 percent since the beginning of 2009.

The gap between the price of new homes and existing homes was about $73,000 in November. It had been as high as $91,000 in August.

The median price of existing homes sold in November was $125,000, $2,000 higher than October.

Existing home prices have stabilized as the inventory of homes on the market has decreased. Only 51 percent of the 3,952 existing home closings in November were bank owned, SalesTraq reported.

That number has routinely been more than 60 percent of the existing home sales and was as high as 65 percent in March. The median price of foreclosure homes sold in November was $118,000 compared to $130,000 for non-bank owned homes, SaleTraq reported.

The foreclosure pipeline shrunk in November as well with 1,477 homes taken over by banks, the second lowest monthly total in 21 months and 27 percent below November 2008. SalesTraq reported 2,301 repossessions in October.

So far this year, SalesTraq reported 22,519 repossessions, which means the 25,276 in 2008 may not be surpassed. Analysts said foreclosures have fallen because of a self-imposed moratorium by lenders earlier this year and a new state law that went into effect July 1 allowing homeowners to seek mediation with lenders. Some predict foreclosures will reemerge as a major problem in 2010 because of the weak economy.

SalesTraq reported 10,459 homes were on the Multiple Listing Service at the end of November, and that Las Vegas has a 2.6-month supply of homes based on the existing sales trend.

The 3,952 sales of existing homes in November was the fewest since March, but it’s still 51 percent higher than November 2008. Sales traditionally slump during the holidays.

On Monday, First American CoreLogic released its forecast for Las Vegas that predicted home prices would remain flat through October 2010. It predicted a decline of less than 1 percent.

Brian Wargo covers real estate and law for In Business Las Vegas and its sister publication, the Las Vegas Sun. He can be reached at 259-4011 or at [email protected]