Mar. 22, 2007
Copyright © Las Vegas Review-Journal

Closings drop for new, existing homes, but median prices climb

By HUBBLE SMITH
REVIEW-JOURNAL

Home Builders Research on Wednesday reported 1,411 new home sales in February, less than half the number sold in the same month a year ago. Nevertheless, the median price of a new home climbed 2.3 percent to $315,965.

It was the same story for existing homes. There were 2,332 recorded resales during the month, down 27.2 percent from a year ago. The median price rose 2.4 percent to $289,000.

“The Las Vegas housing market is still slugging it out for cautious consumers who are looking for steals and deals,” housing analyst Dennis Smith of Home Builders Research said.

The average price of a recorded resale was $369,005 in February, an increase of $34,193, or 10.5 percent, from last year. Smith said resales of high-rise and mid-rise condos are pushing up median and average prices and that must be taken into consideration.

Las Vegas-based SalesTraq reported dips in both new and existing home closings. New-home sales fell 49.5 percent to 1,441 and existing home sales fell 17.2 percent to 2,594.

Again, despite the sales slump, median new home prices rose 3 percent in February to $321,555 and resale median prices increased 1.4 percent to $284,000.

“This defies both the laws of gravity and economics,” SalesTraq President Larry Murphy said.

Builders pulled 1,005 new home permits in February, down 60.6 percent from a year ago, and that follows a 53.9 percent drop in January, SalesTraq reported.

Mid-rise and high-rise closings were lower in February than January, as were condominium conversion sales, Murphy said.

Prices haven’t dropped because sellers haven’t adjusted to the marketplace yet, said Gena Lofton, chief executive officer of Value Added Exchange, a Los Angeles-based real estate consulting company.

“I believe they will go down,” she said. “You’ve got so many subprime loans that are going to be resetting. When they reset, if those owners aren’t able to refinance, especially with credit requirement tightening, prices will begin to weaken. It just takes time to work through the system. The market has been overvalued for quite some time.”

Smith of Home Builders Research said problems with subprime lenders shouldn’t surprise anyone.

“Since early in 2004, we have all read and discussed the large number of nontypical loans being processed by some lenders,” he said. “It would only take price reductions or tightening the credit requirements by the primary mortgage market to cause problems with subprime lenders.”

Five-year adjustable-rate mortgages have risen from 3.4 percent in early 2004 to 5.9 percent at the end of last week.

Traffic through model homes has been stable since February, but net sales have declined 37.6 percent for the first two months of the year, Smith said. The cancellation rate has declined to 24 percent from 26 percent a year ago.

There are still homes being sold in Las Vegas, but not as many as builders would like to see at this time of year, he said.

The inventory of new homes for sale continues to decline while resale listings have escalated.

SalesTraq showed 21,220 homes on the Multiple Listing Service in February, nearly a 50 percent increase from a year ago and a supply of 12.2 months at current sales levels.