LAS VEGAS HOUSING 2Q17: Market at 2008 Levels; Higher Land and Construction Costs force Builders to Raise Prices
- Through 2Q17, Annual New Home Starts are up 10% YoY – and at the Highest Levels since 1Q08
- Production is shifting to the higher price points as nearly 20% of starts are now in the $400k-499k range. Under $200k Production has been nearly eliminated.
- Compared to June 2016, the average asking price of for-sale homes is 12% higher at $435k
Metrostudy’s 2Q17 survey of the Las Vegas housing market shows that through 2Q17 annualized single-family new home closings were 8,149, up 19% YoY. Annual starts are up 10%. 2Q17 quarterly starts are also up 10% compared to 2Q16, which can be indicative of both increased demand, low levels of finished inventory, and tight lot supply. The market continues to set new highs, as annual new home starts are at the highest level since 1Q08.
“Production under $200k has been nearly eliminated as base prices have shifted into the $200-$400k range,” said Greg Gross, Regional Director of Metrostudy’s Las Vegas market. “2Q17 marks the quarter that more product will be coming on line priced above $400k; nearly 20% of starts this quarter were in the $400-$499k range. Our average “offer to build” price for all Single Family Detached active projects is $433K; up 6% compared to year ago. Higher land and construction costs coupled with strong demand are forcing builders to raise prices. Entry and mid-level product will be opportunistic as well as more affordable attached product as the market continues to struggle to meet first time homebuyer’s needs.”
Total Finished Vacant housing inventory has decreased 3% this year. Single Family Finished Vacant inventory increased 4% as builders try to replenish their vacant inventory to satisfy demand. Total Single Family inventory including units under construction has increased 5%, again, with increasing demand and lack of supply, the market needs more homes under construction. Currently, there is only a 1.3- month supply of Finished Vacant homes at current absorption pace.
Pricing in the resale market has increased steadily through June. The average sales price for Single Family Homes increased 7% this year with Median sales price up 10%. Compared to June 2016, the average asking price of for-sale homes is 12% higher at $435k.
The finished lot supply remains at record lows. There are now 8,346 Finished SFD lots today, which is only 12 months of supply, even though 6,774 new lots were delivered during the past 12 months. A 25% decrease compared to last year’s lot deliveries.
There are now 10,584 lots in development compared to 2Q16 when 12,259 lots under development, the total number of lots in development is 2% fewer than last quarter, and 14% fewer than last year. The majority of the new lots in development are in Summerlin, Inspirada, Skye Canyon, Cadence and the general Southwest Valley. Expect more activity in North Las Vegas as well. It is worth noting that this number of finished lot supply has declined over the past year, which will keep supply relatively tight, at least for the next 12-18 months.
For information contact: Greg Gross @ 916.231.9370
Metrostudy, a Hanley Wood company, is the leading provider of primary and secondary market information to the housing and related industries nationwide. Established in 1975 in Houston, Metrostudy provides research, data, analytics and consulting services that help builders, developers, lenders, suppliers, retailers, utilities and others make investment and business decisions every day.www.metrostudy.com
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