Las Vegas homebuilders are seeing more signs of a turnaround, but with borrowing costs poised to rise, sales could fall again, according to a new report.
Builders sold 474 new homes in Southern Nevada last month, according to Las Vegas-based Home Builders Research. That’s up 9.5 percent from the same month last year.
The median sales price of last month’s closings was $297,860, up less than 1 percent year over year, though builders also pulled 661 new-home permits in February, up 71 percent from a year earlier.
Altogether, they sold 835 new homes this year through February, up 0.5 percent from the same period in 2014, and pulled 1,068 permits, up 28 percent, Home Builders Research found.
A rise in interest rates, however, could dampen business.
It’s “not a matter of ‘if’ but ‘when’” the Federal Reserve raises rates, according to Home Builders Research President Dennis Smith, who said he doesn’t believe that Las Vegas’ housing market — for new and used homes — is strong enough for buyers to withstand a jump in monthly payments.
The average interest rate on a 30-year mortgage last month was 3.71 percent. That’s historically low but up from 3.67 percent in January, according to mortgage-finance company Freddie Mac.
In places such as Las Vegas that were slammed by the recession, “affordability is absolutely the key to greater sales velocities,” Smith wrote in today’s report.
There will be a brief burst in sales to people who jump in before rates go up, he said, “but that euphoria will likely be short-lived.”
“Some of the lenders we have spoken to recently are still very positive when they are in front of housing industry groups or individuals who only like to hear only the ‘good news,’” he wrote. “However, when we speak to them one-on-one, many are worried about what any rising mortgage rates could do to housing sales velocities.”
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.