www.lasvegasmtg.com Report: Recently Las Vegas Inc. had a article written by Eli Segall titled "New Home Sales Slowing, But Prices Still Up" stating that new home construction market in Las Vegas has softened compared to last year.
Based on data provide from the article Las Vegas home builders sold 433 new homes last month, which is down 15 percent from a year earlier, according to a new report from Las Vegas-based Home Builders Research.
Fewer permits have been pulled and reported to be 22% lower then the year prior.
The article reports that the median price for a new constructed homes is now $296,000 and the slowdown is due to higher borrowing costs and the higher interest rates from prior 2013. The new homes sales in 2013 rose every month and then slowed down toward the end of the year.
Why the reduction in in new home sales from 2013 to 2014? Can the slowdown be the direct result of higher interest rates alone or higher home prices? No, to higher interest rates! Yes to higher home prices.
Interest rates have been on either side of of the 4% fence in 2013 as it is in 2014, but sales of new constructed homes continued to rise until the last part of the year.
On December 6th, 2013 HUD announced the loan limits in Clark County would decrease from $400,000 to $287,500 for all FHA loans effective January 1, 2014. With the median price home now at $296,000 any home prices above $298,000 would make FHA loans no longer an option for financing unless the buyer has a higher down payment to reach the FHA loan limits. With higher Upfront Mortgage Premium and the Annual MIP being for the life of the loan the added cost have made FHA loans monthly payments increasingly more costly to own a home and harder to qualify for the debt to income ratio.