After a prolonged period of crisis, the Las Vegas real estate market is slowing down.
Sales are down, inventory on hand is up and more sellers are cutting prices amid sharply rising mortgage rates that have pushed up borrowing costs for buyers.
Not all aspects of the market are falling, as buyers continue to pay record prices in Southern Nevada — an area long considered a more affordable outpost but recently ranked among the worst places in the country for first-time buyers.
The Las Vegas housing market is no stranger to volatility – and lately the industry has been anything but flat.
Not only is housing moving in multiple directions at once, but people are also grappling with high inflation and fears of a recession. Plus, the most pressing natural resource issue in our growing, drought-stricken desert metropolis continues to grab headlines for all the wrong reasons.
Lake Mead, which provides about 90% of southern Nevada’s water, fell to record lows. Among other side effects, a barrel containing the remains of a murder victim – possibly thrown from a boat decades ago – was discovered in early May after water levels dropped.
So, does all of this mean that the Las Vegas real estate market is headed for a free fall? The short answer is no.
There’s no way to predict what will happen with the overall economy this year or how long home sales will continue to decline. Housing markets are always subject to ups, downs and other changes. It is unclear how long the current trends will last.
But buyers have indeed pulled back lately as rising mortgage rates wiped out the cheap money that fueled the unexpected post-pandemic U.S. housing boom.
On the construction side, builders recorded 767 net home sales – new purchase contracts minus cancellations – in Southern Nevada in May, down 16% from April during the spring buying season generally. charged, according to Las Vegas-based Home Builders Research.
The monthly sales tally in May was the lowest of the year, the company reported.
Nationally, the pace of builder home sales in May was up 10.7% from April but down 5.9% from May of last year, federal data shows. .
The National Home Builders Association said it expects sales to fall this month following recent interest rate hikes from the Federal Reserve aimed at calming inflation.
“High construction costs and rising mortgage rates are keeping many buyers out of the market,” Jerry Konter, president of the builders association, said in a press release.
On the resale side, just over 2,900 single-family homes traded in Southern Nevada in May, down nearly 9% from the same month last year, the Las Vegas Trade Association reported. Realtors.
The median sale price for such homes hit a record high of $482,000 in May, up 25.2%, or $97,000, from a year earlier.
In the United States, the pace of resales fell for the fourth consecutive month in May and is expected to continue to decline, the National Association of Realtors reported.
“A sharp decline in sales is the latest evidence that declining housing affordability is forcing the housing market to put the brakes on,” Nicole Bachaud, an economist at real estate listing site Zillow, said in a statement.
A key question for Las Vegas is where house values will head. Following last year’s buying frenzy, many people are probably wondering what their home will be worth in a year or two.
Your guess is as good as mine.
Contact Eli Segall at email@example.com or 702-383-0342. Follow @eli_segall on Twitter.