Metrostudy’s survey of the Las Vegas housing market shows that through 3Q14, annual single-family new home closings were 5,695. That’s 14 percent less than in 3Q13. The quarterly closing count improved slightly, as did the quarterly start pace. We counted 1,639 new home starts during the 3rd quarter of 2014 which is 8 percent less than the 3Q13 starts, but about 1 percent more than the previous quarter. The annual start pace decreased by 19 percent year-over-year. All of these indicators point to both slightly weaker demand and very tight lot supply.
“New home prices have risen dramatically this year,” said Greg Gross, director of Metrostudy’s Las Vegas Region. “Our median “offer to build” price for active projects is $287K; 7 percent higher than one year ago. We are seeing fewer and fewer homes available at the lower price ranges.
Production under $200K represents only 9 percent of all housing starts for the quarter compared to 3Q13 when 13 percent were under $200K. Pricing in the resale market has also improved rapidly. Average sales price for Single Family Homes increased 7 percent this year with Median sales price also increasing 13 percent. Compared to September 2013, the average asking price of for-sale homes is 23 percent higher at $307k.”
Total finished vacant housing inventory has declined 16 percent this year. Single-family homes which represents 35 percent of all inventory; has only 1.4 months of supply at current pace. Attached finished and vacant inventory is 1,905 with months of supply at 24. However annual closings of condos are improved dramatically during the past 2 years which lowered the condo supply considerably.
The highrise market has seen a significant flurry of activity this year as investors have realized the value of Las Vegas. Entry and mid-level product will be opportunistic as the market slide ends. The attached home market has seen the median sales price increase 10 percent this year
The lot inventory level has eroded steadily since the first quarter of 2008. Class A positions have quickly become in short supply over the past two years. Total finished lot supply has fallen considerably over the past year and lot deliveries have remained slow. Months of supply stands at 16 and supply has decreased 8 percent since 3Q13. The net absorption of lots highlights the dearth of deliveries as we continue to deplete the supply even as 2,100 new lots were added during the third-quarter. A total of 5,123 single-family lots have been delivered over the past 12 months and lot supply remains near record lows.
The overall supply of finished SFD lots is declining and development opportunities for delivery in the next 4 years must be considered today. There are now 13,607 lots in development compared to 3Q13 when only about 9,300 lots were under development, immediate production capacity is still healthy for the next year. The majority of the new lots in development are in Summerlin, Inspirada and Cadence. It is worth noting that this number of finished lot supply is the lowest since Metrostudy began counting in 2002.
“One of the most challenging issues over the past year was the availability of lots and the impact on land prices,” said Gross. “2013 marked a turning point as land development increased 81 percent. The third-quarter of 2014 is no exception as lot development has increased 47 percent compared to 3Q13. Builder confidence in the market remains strong as the market is at 2008 levels. However affordability may be reaching a point which may begin to force first time buyers out of the market for new homes. The tightened lending standards, lower FHA limits, rising home prices and interest rates and the expected increase in resale homes entering the market, are all factors which may cause new home buyers to rethink their home-buying decisions during 2014 and 2015.”
Metrostudy’s weekly sales and traffic reports show that the weekly sales per subdivision has fallen below levels reached in 2012 and 2013. At the same time, both the weekly cancellation rate and the weekly cancellation rate has risen higher than the previous two years. This is notable since the traffic per subdivision is higher than the past two years. It appears that while shoppers are visiting the new home communities, they are not committing to purchase at the same pace as we enter the end of 2014.
Contributed by Metrostudy.