Las Vegas Homes and Real Estate News
Rising home cancellations felt in LV Feb. 17, 2006 A decline in new home orders by some of the nation's large builders reflects a softening in the housing market that is being felt in Las Vegas, a local housing research expert said. KB Home, the No. 1 builder in Las Vegas with 3,936 closings in 2005, recently filed a report with the Securities and Exchange Commission that said cancellations of new home orders rose during the first two months of the year while net orders for new homes fell. That follows a report from Toll Bros., a high-end home builder with 374 closings in Las Vegas last year, that orders for new homes fell 21 percent in the first quarter. "It's softer than it was, the way it should be," said Dennis Smith, president of Home Builders Research, "because we all knew it was going to slow down sooner or later. We got away from talking about cycles and started talking about bubbles. The cycle is on the downward slope of the peak, but we're going to be OK." Excluding apartment conversions, Las Vegas is going to be hard-pressed to match last year's record of 30,750 single-family detached new home closings, Smith said. He counted 31,010 new home building permits in 2005, down 1,869, or 5.7 percent, from the previous year. "I think most of the big builders will struggle to meet last year's totals," he said. "Anytime you have interest rates on the rise, you're going to have higher cancellation rates. People are not able to qualify or if they haven't locked in their payment and rates during the construction of the house, if rates go up twice during that six months, they go to close and find out their payment has increased since they signed their contract. They might get cold feet." There's always slightly less activity in the housing market around the end of the year, Rulof said. The past two years have been an exception because of pressure from investors and second-home buyers. "When you have peak year after peak year like we've had, you start moving toward a more normal year," he said. "You can't run at that fever pitch forever. I think we're entering a healthy period." Rulof said it's likely that KB and other builders are adjusting their numbers downward from last year. "It's an adjustment. Las Vegas is so stable," he said. "These (analysts) would all like to see the demise of Las Vegas for some reason. We're a unique place and a unique economy and that can't be overstated. You can't put us in the same box." James Chung of Boston-based Reach Advisors expects rising cancellations and falling orders to be the norm across the board for publicly traded builders. "When there's been high price increases or lots of new homes being built, when growth has been so high, it's inevitable that it will slow down and it's going to hit some of the home builders hard," he said. "They've had to adjust revenue expectations. All of them have a plan B." Cancellations are rising partly because people have found they're not able to sell their current home for as much as they thought, Chung said. If you are planning to relocate in the Las Vegas area, contact us for a prompt response to any questions you have about the Las Vegas real estate market. We invite you to visit our website to view updated daily listings of Las Vegas homes at Free Las Vegas Homes MLS Search |
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