Lack of land holds new luxury home sales down

The number of new production home closings priced at $1 million and higher fell 15 percent during the first half of 2024 but is expected to get a boost from a new high-end development called Ascension ramping up in Summerlin.

Market observers said people shouldn’t fret that it’s a warning sign of the economy. Instead, it’s a reflection of not having enough luxury production homes for sale with limited land available.

The 227 closings between January and June are the fewest number of new luxury home closings since there were 203 in 2021. There were 267 in the first half of 2023 and 237 in the first six months of 2022, according to Las Vegas-based Home Builders Research.

That decline in luxury new home construction comes as the overall new-home market for all price points combined ran 19 percent higher through the first six months, Las Vegas-based Home Builders Research reported.

The $1 million and above new home closings made up 3.4 percent of the overall new-home marketplace through the first six months. That’s down from 4.7 percent through June 2023.

That’s about to change as Pulte and Toll Brothers build out Ascension, with Realtors saying many homes have been sold and will show up as closings when construction is completed in the second half of the year and into 2025 and later.

Ascension is the new luxury development between The Summit Club resort community and Mesa Ridge in Summerlin. Homes start at $1.6 million for Toll Brothers and $1.7 million for Pulte

Toll Brothers had its first two closings at the end of June. Pulte had none as homes remain under construction.

The builders made news within the industry when they teamed up to close on 216 acres in December 2021 for $135 million, or $625,000 per acre. Their plan called for 561 single-family homes in the guard-gated community, which includes parks and recreational center.

Luxury Realtor Routh-Silberman with Douglas Elliman of Nevada said that demand at Ascension has been strong and that she has had clients purchase homes in the $2.5 million range and won’t close until the homes are finished, so those sales haven’t shown up in the numbers yet.

“They are almost sold out, too,” Routh-Silberman said. “I have so many clients that bought in here. That is the No. 1 seller in Summerlin for sure.”

Routh-Silberman, the broker at the luxury development MacDonald Highlands in Henderson, said the reason luxury new home sales are down is because there’s not enough inventory for buyers, which is hindered by the lack of available land for builders.

“It’s a land issue,” Kristen Routh-Silberman said. “They would sell through if we had it. At MacDonald Highlands we’re down to our last 15 lots.”

Routh-Silberman said there was hope Summerlin would make more land available for a luxury production home community, but that has been set aside for a Sony movie studio.

“When you look at the map, the northwest and over by Inspirada in Henderson (may be all that’s left),” Routh-Silberman said. “The Summit Club (luxury community in Summerlin by Discovery Land) is selling out this year, and The Ridges has already sold out. Southern Highland is going to release some lots. High-rise, here we come.”

Market observers are waiting for a Summerlin planned high-end, custom-lot luxury development in the northwest part of the master plan with about 130 lots. Summerlin officials have talked with Realtors and builders about the unnamed project but have yet to announce it and give a timeline. Lots are expected to cost at least $4 million at the lower end

Dan Coletti, owner of Sun West Custom Homes, agreed that a lack of land has probably contributed to a decline in luxury production home closings this year. Ascaya in Henderson is one, however, that has plenty of inventory remaining for custom lot sales where buyers purchase land and hire a builder to design and construct the home, he said.

“Lot availability for luxury residents is being impacted by the lack of land in the market,” Coletti said. “It’s dwindling rapidly because there’s not a new MacDonald Highlands and only one Ascaya. Discovery has used up all of theirs as well. I don’t want to say we’re desperate for custom-home lots, but it’s true the trend is moving toward less and less custom-home lots, and the demand is greater than the supply.”

Coletti doesn’t rule out the Howard Hughes Corp., the developer of Summerlin, making more land available for luxury production homes on the lower end, as it did for Ascension.

“For production homebuilders, Summerlin bends over backwards and who knows what they might do to try and find another chunk of land,” Coletti said. “I worry less for them than I do for the custom-home market because for developers like Summerlin there’s more money to sell to production builders than the custom-home community.”

Tyler Jones, CEO and founder of Blue Heron, a luxury custom and production homebuilder, said land constraints are something the industry is feeling.

Blue Heron has eight active communities including MacDonald Highlands, Lake Las Vegas, Southern Highlands and Ascaya. Jones said he has plenty of lots at the moment, but it’s difficult to find lots with city views in Henderson that customers desire. There are fewer options in the west valley.

“It’s a pretty constrained market,” Jones said. “Land availability is something we’re definitely concerned about over the next several years. I think it will affect pricing because there’s not a whole lot of land left and people continue to move to Vegas. We have to find more locations, and we’re working on that actively.”

Jones pointed to Ascension as helping with the demand and noted how that project is doing well and moving through its lots quickly. Because of the strong demand, however, it won’t be around for very long, he added.

“Summerlin still has quite a bit of land left, and they are very strategic and smart about what they do,” Jones said. “They are not in a hurry, but I suspect there will be more land (for luxury homes) coming online in Summerlin in the coming years.”

Jones said the planned Hollywood studio in Summerlin will further boost demand. He said he has three homes with a price tag of $20 million plus under construction in the valley and sees more of that in the future.

“Assuming that does happen, there’s going to be a lot more wealthy residents that are going to need homes here,” Jones said.

Top luxury production builders

The decline in luxury closings among builders was across the board during the first six months of 2024, with only a few showing slight gains.

■ Toll Brothers led the way with 66 closings, up from 62 a year ago. The bulk of its sales were Acadia Ridge, Mesa Ridge and Mira Villa in Summerlin and Bella Strada in Lake Las Vegas.

■ Following Toll Brothers, Lennar was second with 38 sales, down from 44 a year ago. Its sales were divided among Arches in Summerlin, Erhardt Estates and Sonora in the northwest valley and Tresor in Henderson.

■ Tri Pointe Homes closed 24 luxury homes, down from 43 a year ago. It was led by Kings Canyon and Overlook in the northwest portion of Summerlin.

■ Christopher Homes had 19 closings, the same as in 2023. All of its sales were in MacDonald Highlands.

■ Richmond American was next with 17 sales, down from 24 a year ago. Its sales were in Estrella Park in the northwest valley and Galway Grove in the southwest valley.

■ Pulte had 17 closings, down from 31 a year ago. Its sales were divided between Carmel Cliffs in Summerlin and Del Webb at Lake Las Vegas.

■ Blue Heron had 10 closings, up from one production home a year ago. It recorded two of the highest sales of the year at its Equinox project in MacDonald Highlands in Henderson. One was for $10.5 million and the other for $6 million. Most of the sales were at its Shoreline project at Lake Las Vegas.

■ Pinnacle had nine closings, down from 23 a year ago. Most were at Sunset Ridge in the northwest valley.

■ Shea Homes had five sales, up from four a year ago. All are Trilogy at Summerlin.

■ Taylor Morrison had four sales, up from two a year ago. The four at Marbello and Portofino at Lake Las Vegas.

■ Woodside Homes had three sales, up from two a year ago.

■ Landon Miller Homes also had three sales, down from five a year ago.

■ Century Communities had two sales, up from one a year ago.

■ Liberty Homes had two sales, down from five a year ago.

■ Jewel Homes, Discovery Builders and Widespread Construction had one each. The latter had a $8.5 million home in Ascaya, the second highest new-home sale of the year.