Analyst: Home sales picking up, but market still fragile

Las Vegas homebuilders started 2015 on a positive note, even though plenty of weak spots remain, an analyst said.

Southern Nevada builders sold 355 new homes in January, down 12 percent from a year ago, according to a new report from Las Vegas-based Home Builders Research.

The median price of last month’s closings was $318,190, up 6 percent year-over-year. Builders also pulled 407 new-home permits, down 9.5 percent from a year ago, indicating a drop in construction plans.

By the middle of January, builders were selling at a pace of almost one house per subdivision each week, double the rate in December.

That’s on par with early 2014 and “not at any type of record pace” for the area, “but it is a very positive turnaround from the lackluster activity during the last two quarters of 2014,” Home Builders Research President Dennis Smith wrote in his report.

In 2014, after business rose fast from the depths of the recession for a few years, new-home sales dropped 18 percent from 2013 and prices were volatile.

“Frankly, we are a bit surprised that demand has improved so quickly,” Smith wrote.

One reason, he said: buyers are jumping in because they’re convinced that interest rates will rise this year, increasing their borrowing costs.

The average interest rate on a 30-year mortgage loan last year was 4.17 percent. That’s historically low but up from 3.66 percent in 2012, according to mortgage-finance company Freddie Mac.

Smith said it’s “inevitable” that rates will climb this year, but it’s unclear when, and it depends largely on the national economy.

Overall, the valley’s once-decimated housing market has improved the past few years but remains laced with problems, including high rates of foreclosures, underwater borrowers and subprime credit scores.

Progress can easily be thwarted.

“Let’s face it, the housing market is still very fragile,” Smith wrote.

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