With the recent plunge in home sales in Las Vegas and across the country, U.S. builder confidence has fallen for the eighth consecutive month as developers face a “housing recession”, according to a new report.
The National Association of Home Builders said on Monday that builder confidence fell in August as rising interest rates, ongoing supply chain issues and high home prices “continue to exacerbate housing affordability issues.
In “another sign that a declining housing market has not bottomed out,” confidence in the market for new single-family homes has slipped to its lowest level since the early months of the pandemic more than a month ago. two years, the association reported.
The Federal Reserve has raised interest rates in an effort to calm inflation, and in the housing market, borrowing costs have fluctuated but are well above last year’s lows.
The Fed’s monetary policy tightening and “persistently high” construction costs have caused a “housing recession,” Robert Dietz, chief economist for the builders’ association, said in a Monday news release.
Homebuyers are retreating in Southern Nevada and across the United States, after a year of huge price increases, as rising mortgage rates wipe out the cheap money that fueled the unexpected housing boom in the United States. United after the outbreak of the pandemic.
The average rate on a 30-year home loan in July was 5.41%, down from 2.87 in the same month last year, according to mortgage buyer Freddie Mac.
Coldwell Banker Premier Realty agent Tricia Kiefer recently said builders in the Las Vegas Valley have “totally changed.”
She said they are offering to apply money to closing costs and again offering commissions to buyers’ agents.
Real estate professionals said last year that some builders had cut commissions for agents who brought clients or offered them a fixed fee.
Some builders have also started cutting base prices lately “for the first time in a very long time,” Andrew Smith, president of Las Vegas-based Home Builders Research, reported last month.
Century Communities, a national homebuilder with projects in southern Nevada, recently announced it was “bringing back its popular Purple Tag sale” until August.
The sale offers “significant savings” through special pricing, closing cost assistance, competitive rate financing and lock-in programs and move-in packages, the builder said in a press release.
“More and more” cancellations
Fueled by low borrowing costs, the Las Vegas housing market hit its most frenetic pace in years in 2021. Prices soared to new all-time highs virtually every month as buyers flooded properties with offers, homes sold quickly and the annual number of resales hit a record high.
Homebuilders put buyers on waiting lists, steadily hiked prices and, in some cases, drew names to determine who might buy a spot. Builders made just over 12,900 net sales — new purchase contracts minus cancellations — in Southern Nevada last year, the most since 2006, Home Builders Research previously reported.
However, sales have been falling lately.
Builders recorded 713 net sales in June, down nearly 24% from the same month last year, according to figures from Home Builders Research.
June’s sales tally was the lowest of the year and marked the third straight monthly decline, the company reported.
Nationally, the pace of new home sales in June fell 8.1% from May and 17.4% from June 2021, according to federal data.
“After months of scrambling to build homes to meet scorching housing market conditions, builders are suddenly seeing more and more contract cancellations, sellers of existing homes are lowering prices, and homes are lingering on the market,” Nicole Bachaud, an economist at listing site Zillow, said previously.
On the resale side, Southern Nevada is seeing fewer purchases, rapidly increasing inventory, plenty of price drops, and more bargaining power for buyers.
Amid the pullback, selling prices fell month-over-month in July for the second straight time after not falling for more than two years.
The median sale price of previously owned single-family homes — the bulk of the market — was $465,000 last month, down 3.1%, or $15,000, from June, the trade association reported. Las Vegas Realtors.
“We are definitely seeing a shift in the housing market,” LVR President Brandon Roberts said in a press release. “We haven’t seen prices slow like this in several years.”