Thursday, March 24, 2005

Price of Las Vegas homes drops in February


Home "for sale" signs are seen Wednesday in Las Vegas. Median prices for existing homes fell in February when compared to January.
Photo by John Gurzinski.

The median prices for both new and existing homes in Las Vegas dropped in February from the previous month, though they're still substantially higher than a year ago, a local housing market expert said Wednesday.

The new home median price in February was $286,805, down 3.9 percent from January's median price of $298,532, said Larry Murphy, president of SalesTraq. It's a 34.7 percent increase from $212,966 in February 2004.

Resale median prices dropped to $235,000 after remaining flat at $250,000 for the previous seven months.

"Looking at the January and February data, I think we're still seeing the impact of the first half of 2004, when we had a crazy runaway market and then it flattened out," Murphy said. "I think we're still adjusting to and recovering from that. That's not something you swallow and get over it in 10 minutes."

New home closings increased in February to 2,382, a 7.7 percent increase from a year ago and slightly above the 2,313 closings in January. Existing home closings totaled 4,162, up 2.2 percent from a year ago and far ahead of the 3,259 sales in January.

Murphy said Las Vegas can expect to see further declines in median prices for the next few months, then incremental increases toward the end of the year.

"I think the fundamentals are sound. Demand has never diminished. We ran out of supply last year, but today we have supply," he said. "In the last 12 months, we've had more supply than closings. If demand remains the same, prices go down. When supply trends downward, prices rise. It's that simple."

Home builders have cut back on new home permits, which dropped 8.7 percent in February to 2,492 on top of an 81 percent decline in January.

In a rolling 12-month period from March 2004 through February, home builders pulled 30,838 permits and closed on 29,272 homes. That would indicate that new home inventory remains under one month's supply at 1,596 units, Murphy said.

Also, the number of available homes on the Multiple Listing Service has grown to 10,750 in February, about four times the 2,662 listings in the same month a year ago.

If the 169 apartment conversions are factored out of the sales, the median new home price for February would be $296,515.

Murphy said the median price is a much better indicator than average prices.

"If we stick with the median, despite the fact we have condo conversions, we've also got Metropolis and Turnberry (high-rise condos) closing, so we're throwing in the high-end stuff with the apartment conversions," he said. "I'm going to use everything thrown into the kettle together with the median price.


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