Prices Retreat for New Homes in Las Vegas

Las Vegas housing prices flattened out in October and new permit activity dropped dramatically, a typical decline as the market enters the end-of-the-year doldrums, a housing expert said Tuesday.

The median price of a new home fell to $272,930, down from nearly $279,000 in September, but still represents a year-to-year increase of $66,078, or 31.9 percent.

The most surprising decline came in new home permits, said Dennis Smith, president of Home Builders Research.

The number for October was 1,379, down 45 percent from the previous month. The monthly average this year is nearly 3,000 and the year-to-date total is 29,226, a 41 percent increase from a year ago.

"I was surprised it dropped that much in one month," Smith said. "Am I alarmed? No. It's a correction and also a seasonal trend."

New home sales remain strong at 2,304 in October, bringing the total for the year to 23,499, up 16.5 percent from last year.

Smith recorded 4,523 resales during the month at a median price of $252,000, an $80,000 jump from a year ago, or 38.7 percent.

"Prices seem to have leveled off for the time being. I still think you'll continue to see them increase in coming months," Smith said. "I think we'll be pushing the $300,000 barrier in three to four months."

Resale prices were the first to stabilize as the inventory of homes for sale grew from a few thousand in the beginning of the year to about 16,000 in September, the Greater Las Vegas Association of Realtors reported.

That led to increased competition and some "adjustments" of prices by new home builders.

"We're OK," Smith said. "I think the market corrected itself nicely in response to the inventory created in the resale segment.

"It's only natural that we see permits decline. I know builders are selling houses and they're still raising prices, although at a much slower rate. Even Pulte raised prices in some subdivisions."

Larry Murphy, president of SalesTraq, another housing research firm in Las Vegas, reported the resale median at $250,000 for the fourth consecutive month.

"I was actually thinking it would drop down," he said. "We're on a plateau. It looks level through the end of the year and very modest increases, if any, in the first and second quarters next year. It think we're still playing catch-up."

Murphy said brochure prices listed by builders in new subdivisions peaked in July and came down a little, largely because of Pulte's drastic cuts in October.

Smith said the "pricing crisis" of October has come and gone and the infamous Las Vegas housing "bubble" never burst.

"This bubble may have let some air escape, but it did not burst," he said. "We still have a viable new housing market."