Tax credit’s end brings lift to June home sales

By Buck Wargo

Tuesday, July 20, 2010 | 1:50 a.m.

Las Vegas’ new-home market in June recorded its largest number of closings in two years, but analysts said the increase is fleeting.

The 983 new-home closings reported by Las Vegas-based SalesTraq is the highest total since 1,086 closings were recorded in March 2008. That’s more than double the 478 new-home closings in June 2009 and 468 higher than May, according to SalesTraq. It reported 4.41 sales per subdivision in June, a 167 percent increase over the 1.65 per subdivision in June 2009.

The 1,723 new single-family home sales in the second quarter is the highest total since the fourth quarter of 2008, according to Home Builders Research.

The increase was expected as first time homebuyers took advantage of an $8,000 tax credit that expired at the end of April. Move-up buyers received a $6,500 credit through the same period, but the closings weren’t expected to show up in large numbers until June.

Now that the credit has expired, the new-home closings are expected to decline over the summer and rest of the year. That has already been seen in weekly sales numbers reported by Home Builders Research.

“The July figures will probably decrease to where they were earlier in the year,” Smith said. “This will be the result of the market supporting itself without the aid of the tax credit. The tax credit was helpful, but this feeble attempt by the feds at fixing the housing market fell well short of their initial expectations.”

Smith said the tax credit bolstered home sales about 35 percent.

Home Builders Research, which tracks sales through deeds, reported 2,995 sales for the first six months of 2010, a year-to-year increase of 630 sales or 27 percent.

Of that total, 2,671 were single-family homes, Smith said. That’s a 21 percent increase over 2009.

The opening of CityCenter has boosted high-rise closings this year, and Smith reported 79 sales were recorded in June.

For the year, SalesTraq reported 3,097 new-home closings, which is on pace to eclipse the 5,244 closings in 2009.

SalesTraq reported a median closing price on new homes of $182,440, a 12.7 percent decline from $209,000 in June 2009. The median sales price was $193,278 in May. New home prices haven’t finished the year this low since 2002 when the median price was $183,557 for the year, the last time it was below $200,000.

Builders have built smaller homes, which in turn have lowed prices, analysts said. Some builders lowered prices to reduce excess inventory. SalesTraq reported a price per square foot in June of $101.12, 6 percent lower than a year ago.

The new-home closing reports released Monday came as the National Association of Home Builders announced its monthly reading of builders’ sentiment about the housing market sank to 14 – the lowest level since March 2009.

Las Vegas builders took out 423 permits in June, which is within a range seen most of the year. But the 23 percent increase over June 2009 is the lowest year-over-year gain in 2010.

During the first six months of 2010, there were 191 more building permits pulled than closings of single-family homes, Smith said. That means there will be little excess inventory.

Las Vegas had 223 active subdivisions in June, which is part of a continuing decline. That’s 23 percent fewer subdivisions since there were 288 in June 2009, SalesTraq reported.

In the existing home market, SalesTraq reported 4,968 closings, the most in any month this year, but that was 1.6 percent fewer than June 2009 when there were 5,047 closings. Analysts said existing home closings have fallen because there is less inventory to choose from (a 2.5-month supply) and banks have been putting off foreclosures.

The 1,549 foreclosures in June are 30 percent below the 2,212 in June 2009. For the year, lenders have foreclosed on 8,481 homes, which is on pace to fall well short of the 20,426 foreclosures in 2009.

SalesTraq reported a median existing home price of $123,000 in June, which is only $153 more than May and $1,000 higher than June 2009. Prices have held steady for 16 months.

Slightly larger homes sold in June compared to June 2009. The average price per square foot was $72.81 in June, which is 6 percent lower than June 2009. It is the lowest price per square foot of any month this year.

Home Builders Research reported a median closing price of $126,000 in June, which it said was a $1,000 increase over June 2009. The firm said it’s the first year-over-year increase since the first quarter of 2007.

Home Builders Research will hold an online seminar on the housing market at 10 a.m. Thursday at a cost of $25. To register, go to homebuildersresearch.com. SalesTraq will hold its quarterly housing seminar at 8 a.m. July 29 at the Tropicana Hotel. For more information, go to crystalballseminars.com.