Las Vegas new-homes sales jump 34.5 percent in April

The new-home market in Las Vegas continues to improve with 347 sales in April, a 34.5 percent increase from the same month a year ago, Home Builders Research reported Wednesday.

Builders are seeing more traffic through new-home subdivisions as resale inventory has tightened, a result of Nevada’s robo-signing law that has slowed foreclosure activity.

For the year to date, new-home closings have increased 20 percent to 1,220.

Some pundits assert that builders should stop building until the inventory of vacant homes is absorbed.

That’s unreasonable, said housing analyst Dennis Smith.

If the environment exists to build and sell homes, that’s what builders are going to do, said Smith, president of Home Builders Research.

“Builders are living for the moment, taking advantage of the situation, and anybody who says they wouldn’t do that is lying,” he said. “If we had a king who said no more houses will be built until we get rid of these distressed homes … that’s the only way it’ll happen.”

Builders have been able to raise median prices 6 percent from a year ago to $200,350 in April. Smith said he expects prices to inch up over the next few months.

Anticipating forward demand, builders pulled 610 new-home permits in April, bringing the year-to-date total to 1,582, a 40 percent increase from the year-ago period.

It will probably be another month before new-home closings catch up to permits, Smith said. By June, new-home closings should reach 500 a month.

Home Builders Research counted 4,306 resale transactions in April, up from 3,849 in April 2011. It brings the total for the year to 17,000, an 18 percent increase from a year ago. The median resale price rose 3 percent from a year ago to $115,000, and it’s up 4 percent from the previous month.

More than 200 new homes have been sold in the master-planned Summerlin community, nearly exceeding last year’s total in just four months, said Kevin Orrock, president of the development by Howard Hughes Corp.

Southern Nevada’s economy has “definitely turned a corner,” Orrock said. He already is starting to plan new neighborhoods for home production, something he hasn’t done for a few years.

“Builder inventories in Summerlin are at their lowest levels in years. In the development world, you don’t have the luxury of turning the spigot on and off,” Orrock said. “Obviously we’re off the bottom in terms of housing. If people are waiting for the bottom, they might have missed it. We’re actually seeing builders increase house prices for the first time in quite some time.”

SalesTraq, another housing market research firm in Las Vegas, showed 351 new-home sales in April at a median price of $201,651, up 6.1 percent from a year ago.

While new-home sales have increased this year, the numbers are “minuscule” compared with historical levels, said SalesTraq analyst Brian Gordon. The 3,972 closings over the past 12 months are down 18.4 percent from the prior year, he noted.

“Tight resale inventory levels, a nosedive in the number of bank repossessions and frustrated homebuyers have pushed the Las Vegas housing market into a unique position,” he said. “Current readings may prove to be a floor in the cycle, or a false bottom, as market forces play out.”

Smith said the robo-signing law, which requires lenders to provide documentation of authority to foreclose, has created “artificial demand” in Las Vegas. By some estimates, there could be 50,000 to 100,000 homes pending foreclosure, part of the so-called shadow inventory being held by banks.

“We know that, builders understand that,” Smith said. “They know (Assembly Bill) 284 has not cured the underlying problem. Everybody knows that, but there is demand out there, and anybody who says they shouldn’t take advantage of it … well, they have their opinion.”

The local trends seem to parallel what is happening across the United States.

New-home sales increased 3.3 percent in April from March to a seasonally adjusted annual rate of 343,000, the Commerce Department said Wednesday.

The gain pushed the annual sales pace to its second-highest level in two years.

Also, sales of previously occupied homes approached a two-year high in April. And Toll Brothers, a key U.S. builder of luxury homes, reported that it returned to profitability in the second quarter.

A pickup in hiring, cheaper mortgages and lower home prices in most markets have made home buying attractive.

“Housing could be a pleasant surprise this year,” said Ellen Zentner, a senior economist at Nomura Securities. She said home construction will probably contribute to overall economic growth this year for the first time since 2005.

Sales of new homes rose 28 percent in April from March in the Midwest and the West, and 7.7 percent in the Northeast. Only in the South did sales fall, by 10.6 percent.

Contact reporter Hubble Smith at hsmith@review journal.com or 702-383-0491. The Associated Press contributed to this report.