49°F
weather icon Clear

Homebuilders reverse sales slump, but not forecast to last

Homebuilders reversed months of slumping sales in Southern Nevada and across the country in August.

But with mortgage rates climbing higher again, new home sales are expected to tumble once more around the U.S.

Builders logged 488 net sales — newly signed purchase contracts minus cancellations — in Southern Nevada in August, up 12 percent from July, according to Home Builders Research, which covers the Las Vegas area.

Before that, sales totals had dropped for four consecutive months.

Still, sales in August were down 44 percent from the same month last year, and builders’ land buying activity “has basically decreased to zero as they wait and see where things end up going into the end of the year,” Home Builders Research President Andrew Smith wrote in a report last week.

“Do not be surprised to see this lull continue for at least the next couple of months,” he added.

‘Sidelined demand’

Not long ago, rock-bottom mortgage rates were fueling a buying binge in Las Vegas and across the nation. But house hunters pulled back in recent months amid higher borrowing costs, and at least one industry group doesn’t expect builders’ sales bump to last.

A “brief decline” in mortgage rates helped boost U.S. sales in August, though sales are “expected to move on a downward trend in the months ahead,” the National Association of Home Builders said last week.

Nationally, the pace of builders’ sales soared 28.8 percent in August from July, after falling almost every month this year, according to government data.

The sales jump showed “there is clearly sidelined demand for housing, but it is being constrained by rising interest rates that are pricing many potential consumers out of the market, particularly entry-level buyers,” Robert Dietz, chief economist with the builders association, said in a news release.

The average rate on a 30-year mortgage in August was 5.22 percent, down from 5.52 percent in June, according to mortgage buyer Freddie Mac.

As of last week, however, it was 6.7 percent.

Last year, the average rate on a 30-year home loan was 2.96 percent.

Fueled by low borrowing costs — and by an influx of out-of-state buyers as people worked from home — Las Vegas’ housing market accelerated to its most frenzied pace in years in 2021.

Prices hit new all-time highs practically every month, buyers flooded properties with offers, and houses sold rapidly. Amid the buying spree, builders put buyers on waiting lists, regularly raised prices and, in some cases, drew names to determine who could purchase a place.

‘Weak’ buyer traffic

The Federal Reserve has raised interest rates multiple times this year in an effort to cool inflation, and in the housing market, higher borrowing costs have thrown cold water on the once-sizzling industry.

On the resale side in Southern Nevada, home purchases have tumbled, available inventory has soared, and sellers have increasingly slashed their prices.

On the construction side, buyer traffic is “weak” in many U.S. markets as more people “remain on the sidelines” because of increased mortgage rates and high home prices, Jerry Konter, chairman of the builders association, said in a news release last month.

In a survey that showed a continued slump in builder confidence, more than half of the builders reported using incentives to bolster sales, including free amenities and price cuts, the association said.

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

Don't miss the big stories. Like us on Facebook.
THE LATEST
Sportsman’s Quest: Marines and a holiday hunt

In my last column I wrote about my “successful elk hunt” with my artist friend, Justin Young. It was a great adventure, but my freezer was still empty.

Fugitive who fled after woman’s attack found hiding in travel trailer

Ryan Sanders, 37, of Pahrump,who fled from authorities following the kidnapping and brutal attack of a Pahrump woman last week has been taken into custody by Nye County Sheriff’s Office deputies and assisting agencies.

2 cannabis lounges OK’d for Nye

KV Group LLV and GGCPA SE Inc. both plan to launch local lounges, where adults will be allowed to smoke, vape and consume cannabis products onsite.

Nascar tickets up for grabs at Bowl-A-Thon

This Sunday, the Pahrump Nugget Bowling Center will be taken over by supporters of America’s heroes during the Wounded Warriors Bowl-A-Thon and event organizer Denise Flanagan is excited to announce the addition of an extraordinarily generous donation to the cause.

Here are the plans for Front Sight firearms facility

When Front Sight Firearms Training Institute filed for bankruptcy in May, many feared that would mark the end for the nation’s largest firearms training center. But the site is expected to be revived under new ownership.

Nye County tribe faced voting barriers this election

The Yomba Shoshone Tribe had difficulty getting an in-person polling location for the 2022 midterms. Tribes across Nevada and Indian Country face barriers in accessing the voting booth.

Bowl-A-Thon to benefit Wounded Warriors

Hosted by local veteran Denise Flanagan, all of the money raised at the Bowl-A-Thon will be donated to Wounded Warrior Project, an organization that supports veterans.