This is an all-time low for any month. Only 284 new houses were closed in January in Las Vegas, as was reported by Home Builders Research. That adds up to an annual total of 3,408 for 2009, assuming the market continues at the same pace to the end of the year. When this figure is compared with the almost 40,000 homes sold at the market's peak in 2005, the difference is dramatic. It simply and coldly points out how far out of control it got on the upside thanks to rampant speculation, easy mortgage money and unrealistic expectations.
Yet, there is something good that can be said about that low January sales number. The supply of homes in Las Vegas valley is still high, whether new or resales. This will certainly help correct some of the imbalance on the new sector's turf, so long as the builders will accept the painful fact that their product has limited demand in this economic climate and will subsequently scale back construction even more. The sooner they acknowledge that the sooner the market will find a sustainable equilibrium.
The big issue is the price. And it has already been troubling them for months. The median new home sales price in January was $233,000, a drop of over 15% from last year, says SalesTraq. That's one thing. Then take the median resale price of $155,000, so reported by Home Builders Research, and the whole picture becomes quite clear why new homes don't sell. They just are nowhere near being competitive with the existing segment.
So, why are builders still constructing homes at an unrealistic price range? If they can't sell them, why build at all? The reasons probably are many and justifiable to them, but the January sales total has to make them reconsider what they will do from here on out.