Las Vegas builders selling fewer homes as mortgage rates climb

Homebuilders’ sales activity dropped sharply in Southern Nevada last month as buyers around the country pull back amid higher borrowing costs.

Locally, builders logged 911 net sales — new purchase contracts minus cancellations — in Southern Nevada in April, down nearly 30 percent from March, according to a new report from Las Vegas-based Home Builders Research.

Last month’s sales tally — reached amid the normally busy spring buying season — was the lowest of 2022, leaving builders’ sales totals this year through April down 18 percent from the same four-month stretch last year, the firm reported.

All told, “this trend may continue as mortgage rates continue to rise,” Home Builders Research President Andrew Smith wrote in the report.

Sales of newly built and previously owned homes in the Las Vegas Valley have tumbled lately as once-rock-bottom mortgage rates push higher and as rising sales prices keep reaching new all-time highs.

Nationally, the average rate on a 30-year home loan was 5.25 percent as of last week, up from 3 percent a year earlier, according to mortgage-finance giant Freddie Mac.

Locally, builders’ median closing price for a new home in Southern Nevada was a record $473,673 in April, up 19.7 percent from a year earlier, Home Builders Research reported.

Moreover, the median sales price of previously owned single-family homes in Southern Nevada was a record $475,000 last month, up 26.7 percent, or $100,000, from April 2021, trade association Las Vegas Realtors reported.

Fueled largely by cheap borrowing costs that let buyers stretch their budgets, Southern Nevada’s housing market accelerated last year. Houses sold rapidly, buyers paid above the asking price, supply was tight, and fast-rising prices reached new all-time highs practically every month.

Overall, it became increasingly difficult to buy a home in the Las Vegas area, more expensive and, some said, increasingly unaffordable, even as Southern Nevada logged a record-high number of resales last year.

However, the main fuel for the frenzy — cheap money — has slipped away, and sales volume has dropped locally and nationally. Across the U.S., resales fell for the third consecutive month in April, the National Association of Realtors recently reported.

Lawrence Yun, the group’s chief economist, said higher prices and “sharply higher” mortgage rates have “reduced buyer activity.”

Las Vegas agent Bobbie Starr Dust said Monday that the valley’s housing market is “leveling off” but “certainly nowhere near being dead.”

Dust, an agent with Berkshire Hathaway HomeServices Nevada Properties, said she listed a home last week that has now received offers after being on the market for five days, compared to the “five minutes” it used to take to field several bids.

Realty One Group agent Judi Hirsh said Las Vegas remains a seller’s market overall, given the still-tight inventory of listings, but the market is “softening” and isn’t experiencing the “craziness” of even a few months ago.

In March, a client of hers was one of 11 bidders on a property and had to go “way over” the asking price, she said. Today, unless a house is priced really low, Hirsh wouldn’t expect to see that many bids on a place.

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