Sales of new homes weigh on Las Vegas housing market

Las Vegas is on pace to sell more than 45,500 existing homes in 2011, which would make it the fourth best year ever, but new-home sales will have one of the worst years in more than two decades, according to a housing analyst.

Home Builders Research of Las Vegas reported the 3,837 sales of existing homes in July brings the yearly total to 26,709. That’s a year-to-date increase of 5.3 percent.

“There’s a perception by some that housing sales are at a standstill,” said Home Builders Research President Dennis Smith. “Obviously, that’s not true.”

But with 92 percent of real estate transactions being existing homes, that doesn’t directly promote economic recovery, Smith said.

The reason is the new-home market remains weak with 316 sales in July to bring the yearly total to 1,990. That’s 1,431 transactions, or 41.8 percent, lower than the first seven months of 2010, he said.

At that pace, the new home market will struggle to reach 3,500 sales, the lowest level in the 23 years that Smith said he’s tracked the valley’s housing market.

For every new home that’s sold, the National Associate of Home Builders estimates three new jobs are created, Smith said. Some 287 building permits were issued for the valley in July to bring the yearly total to 2,311, a decline of 28.5 percent.

“It’s good we’re selling the inventory of distressed existing homes,” Smith said. “Economics 101 suggests we must lower the oversupply of distressed existing homes. It has to happen before the new-home industry can expect any improvement and put people back to work.”

Smith said, however, he’s not optimistic that will happen quickly given the difficulties people are having in getting financing. Nearly 27 percent of mortgage applicants nationwide were denied mortgages in 2010, up from 23.5 percent in 2009, Smith said.

Some 52 percent of sales through the Multiple Listing Service in July were cash deals.

“Investors are still taking advantage of the distressed state of the housing prices in Las Vegas,” Smith said. “It’s too bad more consumers who want to be owner-occupants of these homes can’t qualify for loans or get the appraisals needed to satisfy both parties of a transaction. The perceived lack of any compromise by lenders is holding down the number of closings.”

The median price of new homes in July was $198,518, a year-to-date decrease of $13,869 or 5.6 percent, Smith said. It’s even lower, at just above $193,000, when excluding the 19 high-rise sales in July.

The median price of existing homes sold in July was $109,900, a year-to-year decline of $13,500 or 10.9 percent, Smith said. That marks the fifth consecutive month the price has dropped, he said.

“The decrease hasn’t been overwhelming, only $5,100 or 4.4 percent, but nonetheless, the median resale closing price has softened monthly during 2011,” Smith said. “At this point, there’s no way of being certain how long this trend will continue.”

Smith said the 10,975 homes without offers on the Multiple Listing Service have been languishing for many months and will require steep discounts if they’re going to sell.

Among the 287 building permits issued in July, the breakdown includes:

• KB Home - 42

• Richmond American – 38

• Pulte – 26

• Woodside Homes – 25

• Dunhill Homes – 18

• Lennar – 17

• Storybrook Homes – 15

• William Lyon Homes – 15

• Harmony Homes – 14

• Ryland Homes – 14