THE BOTTOM LINE… By the mid-point of 2012, a shift in the Las Vegas housing market is underway. June was the third consecutive month in which resale closing prices surpassed levels reported during the prior year. It was also the third consecutive month in which effective resale inventory levels remained at approximately one month. With fewer new foreclosures working their way into the supply chain, short sales and non-distressed sales categories continue to account for the dominant share of resale activity. Impacts on pricing are expected to escalate. In the latest month, the median price increased 10.4 percent from the prior year to $116,300 ($78 per square foot). The new construction sector is responding with increased permitting volumes. New home asking prices have started to edge up for homebuilders including Harmony Homes, KB Home, Warmington and others. We believe there is room for further price increases during the next six months. The residential sector continues to have real challenges, including nation-leading rates of delinquency. That said, improvements in sales volumes, prices and general consumer sentiment bode well for the sector.
NEW HOME HIGHLIGHTS
New Home Closings: New home closings totaled 353 during June 2012, down from the volume reported in May (413) and relatively flat with the same month of the prior year (357). While the latest monthly data moderated, new home closings during the past three months appear to be signaling positive momentum with totals up 25.1 percent on a year-over-year basis. As a number of new home communities have closed out in recent weeks and months and new ones have cropped up, sales volumes on a per-subdivision basis remain within a relatively tight range (1.6 home closings per subdivision in June).
New Home Pricing: Closing prices on new home sales have remained relatively stable in recent months. The median price in June was $196,500, yet the average home size has declined slightly. As a result, prices on a per-square-foot basis actually edged above $100 in June and reflected a 5.5-percent increase from the same month of the prior year. With list price increases at a significant share of new home communities and a more qualified borrower base, prices are anticipated to continue to rise through 2012.
New Home Supply: Homebuilders are ratcheting up potential inventory as the number of new home permits is on the rise. The market witnessed 648 new home permits in June, bringing the three-month total to 1,898. The latest monthly volume reflects a 41.8 percent annual increase and the trailing three-month total is up 57.4 percent. It is clear that contracts are up in the new construction sector and builders are responding to meet the demand.
EXISTING HOME HIGHLIGHTS
Existing (Resale) Home Closings: While new home demand appears to be rising, the resale side of the market has also started to shift. The number of closings during June tapered off 32.4 percent from the prior year to 3,852. During the past three months, sales volumes are off 14.5 percent. The decline in closings is partially caused by a supply-side constraint as availability is somewhat limited due to regulatory actions (e.g., Assembly Bill 284). Investor demand remains a key component of the demand equation as 54 percent of sales were made with cash.
Existing (Resale) Home Pricing: Price points in the resale market are responding to reduced availability, as the median closing price edged up to 116,300, or $78 per square foot. The absolute price is up 10.4 percent year-over-year while the per-square-foot figure is up 14.2 percent as the average home size of those sold was slightly smaller in the latest month.
Resale Availability (MLS Listings): The number of available properties listed in the multiple listing service (MLS) remains at relatively low levels (4,636), 66.5 percent below the prior year. When considering the number of closings tracked through the MLS, effective inventory stands at 1.2 months.
Bank Foreclosures (Repossessions): Bank repossessions continue to diminish as lenders are operating under stricter guidelines established by Assembly Bill 284 (AB 284). Foreclosures totaled 313 in June, a fraction of the of the nearly 2,000 posted one year ago
The Panos Team 