Las Vegas housing market hits brakes as sales fall

Sales are down, available inventory is up, and more sellers are slashing their prices amid a sharp jump in mortgage rates that have pushed up buyers’ borrowing costs.

Not every aspect of the market is dropping, as buyers keep paying record-high prices in Southern Nevada — a region long viewed as a more affordable outpost but recently ranked one of the worst spots in the country for first-time homebuyers.

Las Vegas’ housing market is no stranger to volatility — and lately, the industry is on anything but even ground.

Not only is housing moving in multiple directions at once, people also are grappling with high inflation and fears of a recession. Moreover, the most pressing natural-resources issue in our ever-growing, drought-stricken desert metropolis keeps making headlines for all the wrong reasons.

Lake Mead, which supplies about 90 percent of Southern Nevada’s water, has fallen to record lows. Among other side effects, a barrel containing the remains of a murder victim — possibly dumped from a boat decades ago — was discovered in early May after receding water levels.

So, does all of this mean Las Vegas’ housing market is headed for a nosedive? The short answer is no.

There’s no way to predict what will happen with the overall economy this year or how long home sales will keep sliding. Housing markets are always prone to ups, downs and other shifts. There’s no telling how long the current trends will last.

But buyers have indeed pulled back lately as higher mortgage rates wipe out the cheap money that fueled America’s unexpected housing boom after the pandemic hit.

On the construction side, builders logged 767 net home sales — new purchase contracts minus cancellations — in Southern Nevada in May, down 16 percent from April during the typically busy spring buying season, according to Las Vegas-based Home Builders Research.

The monthly sales tally in May was the lowest of the year, the firm reported.

Nationally, the pace of builders’ home sales in May was up 10.7 percent from April but down 5.9 percent from May of last year, federal data shows.

The National Association of Home Builders said it expects sales to tumble this month following the Federal Reserve’s recent interest-rate hikes aimed at cooling inflation.

“High construction costs and rising mortgage rates are pricing many buyers out of the market,” Jerry Konter, chairman of the builders’ association, said in a news release.

On the resale side, just over 2,900 single-family houses traded hands in Southern Nevada in May, down almost 9 percent from the same month last year, trade association Las Vegas Realtors reported.

The median sales price of such homes was a record-high $482,000 in May, up 25.2 percent, or $97,000, from a year earlier.

Across the U.S., the pace of resales dropped for the fourth consecutive month in May and is expected to keep sliding, the National Association of Realtors reported.

“A sharp pullback in sales is the latest evidence that waning home affordability is forcing the housing market to pump the brakes,” Nicole Bachaud, economist at home-listing site Zillow, said in a statement.

A key question for Las Vegas is where home values will head. Following the buying binge of the past year-plus, plenty of people are likely wondering what their house will be worth a year or two from now.

Your guess is as good as mine.

Contact Eli Segall at esegall@reviewjournal.com or 702-383-0342. Follow @eli_segall on Twitter.