Despite a spike in mortgage rates at the end of 2023, the Las Vegas new-home market remains resilient.
In the January Zonda Market Ranking, the metro area was significantly overperforming compared with its long-term historical average. Home builders are ramping up new construction, and starts activity has improved over the past six months.
Stabilizing construction costs and improving supply chains have been positive factors. The lack of skilled workers continues to be a hurdle but has also improved compared with 2022. Tight existing-home supply continues to drive greater demand for new homes, accounting for 25% of total closings.
Strengths
A $3 billion federal grant will support the development of a high-speed rail line, cutting travel time between Las Vegas and Southern California to around two hours. In addition to the jobs created, the bullet train will boost the Las Vegas tourism economy.
Weaknesses
There has been a boom in warehouses with roughly 54 million square feet coming online over the next few years. While Las Vegas’ prominence as a national distribution center and increased economic diversity is a plus, the lower-paying jobs are of limited benefit.
Supply
Quarterly housing starts increased 49.3% over a year ago, while the number of available vacant developed lots sits at 10,545, up 6.8% over the same quarter last year. In terms of supply/demand balance, the market area is 8.82% undersupplied.
Sales
New-home sales in the Las Vegas-Henderson-Paradise metropolitan area increased 41.6% year over year to an annualized rate of 11,303 units in February. Existing-home closings for the 12-month period ending in January posted a year-over-year decline of 24.9% to an annualized rate of 30,608 units.
Prices
The average list price for a new detached home in the Las Vegas region increased 10.7% from 2023 to $569,685 in February, while the average list price for a new attached home increased 4.8% over the same period to $407,372. Homes priced over $550,000 experienced the most closing activity over the past year. The new-home affordability ratio for a detached home reached 24.9% in January.
Economy
Total nonfarm employment in the area increased 4.1% from the same period last year to 1,154,100 payrolls in December, with approximately 800 more jobs compared with the previous month. The local unemployment rate remained flat at 5.7% in December compared with 5.7% in November. December’s jobless rate is lower than it was this time last year when it stood at 6%. Zonda forecasts the region’s unemployment rate will finish the year at 5.3%.
Community
The population for the metropolitan area is approximately 2,399,040 people and is projected to increase by 2% in 2024. There are approximately 936,950 households in the region, which is up 2.7% year over year. Forecasts show that current household formation is expected to increase by an annual growth rate of 3.4% for 2028. Incomes increased by 3.4% from the previous year to $77,789.
Did you know you can access free housing data with Zonda’s Market Snapshots? Reports include new-home supply and valuation, resale listings, jobs, market forecasts, and more. Get your complimentary market snapshot for your local CBSA today.
This article appeared on Builder Online
