Southern Nevada homebuilders sold fewer homes in the first quarter of 2022 compared to the first three months of 2021, but Home Builders Research President Andrew Smith said builders were taking on a greater number permits to prepare for strong demand in the coming months.
Smith will unveil its first quarter figures on Thursday at its annual homebuilding industry event. This year’s session, which is sponsored by Southwest Gas, will again be a webinar that begins at 10 a.m. and lasts about an hour. Go to homebuildersresearch.com record.
There were more than 3,000 sales in the first quarter (more than 1,000 every month) compared to just over 4,000 in the first quarter of 2021, Smith said. First-quarter sales, meanwhile, are still higher than the third and fourth quarters of 2021, Smith said. The end of 2020 and the start of 2021 were well above average, he said.
“It was up from the second half of last year, but not to the level of the first quarter of 2021,” Smith said. “It’s a surprise that new homes are doing so well. Mortgage rates have started to rise and we don’t know how long the out-of-state activity will last. This always seems to be a big factor in the number of homes sold. »
Las Vegas has benefited as Californians cash in on more expensive homes and seek a lower cost of living, no state income taxes and a greater ability to work from home.
Smith said no one should be worried about declining sales in the first quarter, although there continue to be headwinds for builders with the supply chain, rising costs and rising mortgage rates.
“This is not a surprise and should not be taken as a ‘bad omen’ given the historic sales pace seen in late 2020 and early 2021,” Smith said. “Demand continues to be high and supply remains extremely low. He’s not going to fall off a cliff in any way, except anything crazy. I wouldn’t be surprised if it slowed (closer) to 2019 levels, which is still a healthy level of activity.
Smith said net sales (new contracts less cancellations) rose in March to more than 1,250, helped by five weeks of reporting compared to four for January and February. Builders, who recorded 12,902 net sales in 2021, achieved just under 10,000 net sales in 2019.
Nat Hodgson, CEO of the Southern Nevada Home Builders Association, said builders are bracing for demand. SNHBA’s tracking of permits issued in Southern Nevada during the first quarter shows 4,359, some 707 more than in the first quarter of 2021 when it was 3,652.
“Builders have increased their number of permits that they’ve taken away, even though we’ve had delays in getting materials and price increases,” Smith said. “They may be allowing houses they sold a few months ago.
They try to track what they are selling. Hodgson said the industry continues to face issues with supply chain and land availability being the biggest impediment to selling more homes.
“I was hoping it would get a little better,” Hodgson said. “I think we were moving that, but (Russia’s invasion of Ukraine) ruined it (with fuel prices going up). It’s hard to get projections when you have supply chain issues. Now the fuel costs are going crazy. Everything we get here is trucked in. I’m scared of the price. I can’t see any way it won’t keep getting worse.
Hodgson said there should be an increase in net sales and permits in the coming months as builders are able to obtain the additional materials they need to build homes.
“The toughest year to build a house was last year, and this is likely to duplicate that,” Hodgson said. “It’s amazing with supply chains. Is it getting harder and harder to build? Yes, but we will continue to plod along. The only thing I can’t control is the cost.
The median price for new single-family homes in February was $479,808, up 20.6% from February 2021. Attached homes are 24.6% higher at $354,981, according to Home Builders Research.
Coupled with higher mortgage rates, Hodgson said that won’t cost buyers in California, but those in Nevada.
Smith will announce the top builders for the quarter and the best-selling subdivisions in Southern Nevada, including an update to the master plans.