Metrostudy’s 1Q14 survey of the Las Vegas housing market shows that the spectacular growth of 2013 is tapering into this year. The annual closing pace slowed slightly, as did the quarterly start pace. We counted 1,287 new home starts during the 1st quarter of 2014, 13% less than the 1Q13 starts. Through 1Q14 annual single-family new home closings were 6,576, up 18% from 1Q13, the annual start pace increased 5% YOY but is 3% less than the 4Q13 level. All of these numbers indicate both slightly weaker demand and very tight lot supply.
“The availability of lots and the shortage’s impact on land prices continues to be the main story for 2014,” notes Greg Gross, regional director of Metrostudy’s Las Vegas market. “For the past two years, builders had to consider and purchase 'B' and 'C' grade lots just to maintain their position in the market place as class 'A' lots dwindled. 2013 marked a turning point as land development increased 81%, and 1Q14 is no exception as lot development has increased 67% compared to 1Q13.”
Total finished lot supply has fallen considerably over the past year and lot deliveries have remained slow. Months of supply has decreased to 13.5 and supply has decreased 22% since 1Q13. The overall supply of finished SFD lots is declining and development opportunities for delivery in the next 4 years must be considered today. With only 7,300 Finished SFD lots, 4Q13 proved to be the quarter where large scale development began. There are now 15,252 lots in development compared to 3Q13 when only about 8,000 lots were under development, showing that immediate production capacity is still healthy for the next year. The majority of the new lots in development are in Cadence. It is worth noting that this is the lowest level of finished lot supply since Metrostudy began counting in 2002.
Inevitably, the lack of available lots is driving prices up: average sales price for single-family homes increased 17% this year while Median sales price also increased 21%. Compared to March 2013, the average list price of for-sale homes is 19% higher at $299k.
The increasing cost of lots will mean fewer offerings at lower price points in the future. “Production under $200K represents only 12% of all housing start this quarter compared to 1Q13 when 24% where under $200K,” said Gross. “New-home prices have risen dramatically this year. Our median “offer to build” price for active projects is 15% higher than one year ago.”
Builder confidence in the market continues to strengthen as the market is at 2008 levels. Metrostudy expects demand to remain steady yet the year may end slightly lower than 2013. As the first quarter has demonstrated, 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.
For information contact: Greg Gross at 916.231.9370
Metrostudy, a Hanley Wood company, is the leading provider of primary and secondary market information to the housing and related industries nationwide. Established in 1975 in Houston, Metrostudy provides research, data, analytics and consulting services that help builders, developers, lenders, suppliers, retailers, utilities and others make investment and business decisions every day. www.metrostudy.com
Learn more about markets featured in this article: Las Vegas, NV.