New-home prices drop as number of sales rises

By Buck Wargo

Friday, Jan. 1, 2010 | 3 a.m.

The median price of new homes sold in November in the Las Vegas area dropped under $200,000 for the first time in six years and builders sold the largest number this year, a local research firm reported.

The median price was $198,466, down more than $6,000 from October and 19 percent from November 2008, SalesTraq reported.

Another research firm, Home Builders Research, pegged the price at $199,928, the lowest since June 2003, it said.

Buyers closed on 598 homes in November, surpassing the previous 2009 high mark of 486 in October, according to Las Vegas-based SalesTraq. That is the largest number of sales since 633 home closings in December 2008.

Through November, Las Vegas builders 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.

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

Dennis Smith, president of Home Builders Research, said new-home sales have risen for four consecutive months. He said the increased sales are likely a reflection of the $8,000 tax credit for first-time buyers that was set to expire Nov. 30 before being extended through June.

“We may see the monthly new-home closings decline a little during the next few months and then rise again as the cutoff date for the expiration of the extended version of the tax credit approaches in June,” Smith said.

First-time buyers were drawn to new homes because they could lock in their deal and close the loan quicker than if they had to hunt down and close escrow on a foreclosed or short sale homes, Smith said.

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

“We may see the monthly permit figures rise in the first quarter of 2010 as builders prepare for an anticipated increase in sales because of the extended tax credit,” Smith said.

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 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 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.

Smith called it interesting that high-rise condos no longer seem to be having much of an effect on the overall median price and actually put downward pressure on the price in November.

The median price of the 13 high-rise closings in November was $200,000 and the average price was about $220,000, Smith said. A year ago, it was rare to see one priced less than $400,000.

Seven of the closings were Newport Lofts in downtown Las Vegas and three were at Allure near the Strip, Smith said.

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

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 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 as high as 65 percent in March. The median price of foreclosure homes sold in November was $118,000 compared with $130,000 for nonbank-owned homes, SalesTraq reported.

The foreclosure pipeline shrank in November, 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.

SalesTraq reported 22,519 repossessions so far this year, 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 were the fewest since March, but 51 percent higher than November 2008. Sales traditionally slump during the holidays.

The annual total of existing-home sales surpassed 40,000 in November at 43,573 and may reach 47,000, according to SalesTraq. That is the most since 54,828 sales of existing homes in 2005.

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