Since last summer new home sales have been gradually declining in the valley and evidently reached the bottom of the cycle around January of this year. Since then the numbers have been pretty even, but by no means something to write home about. Yet, in the absence of losing any more ground for several months the market is obviously trying to turn this thing around and get going again.
According to Home Builders Research, a Southern Nevada industry expert, a low total of 777 spanking-new single-family houses were closed in June and when that is compared to the record 3,233 sold in June of 2006, the difference is rather serious. It tells us where an over-heated real estate market can go at its peak and also how far it can drop during the necessary correction.
Looking at the median price of all new homes in Las Vegas, that includes single-family houses, condominiums and townhouses, it came in at $269,900 for June that translates into a 16.7% decrease from a year ago. The percentage loss of value is actually a bit lower than for resale homes which show about a 22% drop. Home Builders Research says the median price for a resale home in June was $218,000 and that represents a big actual-dollar gap between these two categories. It comes to roughly $50,000, a noteworthy separation.
That difference seems to clearly explain why resale homes have been selling over the past several months at a much faster pace than the new products. The figure is in fact more than double that. Homeowners and banks with REOs in their books have been aggressive in pricing and the results are obvious while home builders are now hard-pressed to turn a profit even at the current price structure. They don't have the same flexibility to tinker with what to ask for.
The positive sign here is that developers took out 884 new-home building permits in June, a fourth straight hike, although the total for first half of the year is still way down from last year.