Sales of new homes priced above $1 million fell 15% in the first half of 2024, but sales are expected to increase due to construction of a new luxury development called Ascension in Summerlin.
Market observers say this is a warning sign for the economy, not something to worry about. Rather, it reflects a lack of luxury homes for sale due to limited land availability.
The 227 new luxury home transactions that closed from January through June are the fewest since 203 in 2021. In the first half of 2023, there were 267 and in the first half of 2022, there were 237, according to Las Vegas-based Home Builders Research.
The decline in luxury new home construction came as the overall market for new homes at all price levels rose 19 percent in the first half of the year, according to a report by Las Vegas-based Home Builders Research.
Closings of new homes priced above $1 million accounted for 3.4% of the total new home market in the first half of the year, down from 4.7% through June 2023.
That’s set to change as Pulte and Toll Brothers build Ascension: Real estate agents say many of the homes have already been sold and will close once construction is complete, potentially later this year or beyond 2025.
Ascension is a new luxury development located between The Summit Club resort community and Mesa Ridge in Summerlin. Home prices start at $1.6M for Toll Brothers and $1.7M for Pulte.
The first two deals at Toll Brothers closed at the end of June. No deals have closed at Pulte because the homes are still under construction.
The builders made headlines in the industry when they collectively purchased the 216-acre site for $135 million, or $625,000 per acre, in December 2021. Their plan was to build 561 single-family homes in a secured, gated community that would include a park and recreation center.
Routh Silverman, a luxury real estate agent with Douglas Elliman in Nevada, said demand is strong in Ascension, with clients buying homes in the $2.5 million range and not closing until the homes are complete, so those sales aren’t showing up in the numbers yet.
“That one is also pretty much sold out,” said Rouse Silverman, “We’ve had a lot of customers buy from here. It’s definitely our best-selling item in Summerlin.”
Routh Silverman, a broker at MacDonald Highlands, a luxury development in Henderson, said sales of new luxury homes are declining because of a lack of inventory for buyers and a lack of land for builders, which is hampering them.
“It’s about land,” Kristen Rouse Silverman said. “If they have land, they’re going to sell it all. In McDonald Highlands, there are only 15 parcels left.”
Rouse Silverman said there was an expectation that Summerlin would offer up more land for a luxury film production residential community, but that land has already been reserved for Sony’s film studio.
“Looking at the map, the Inspirada area in Northwest and Henderson (maybe that’s all that’s left),” Rouse Silverman said. “Summit Club (a luxury Summerlin neighborhood near Discoveryland) sold out this year, The Ridges is already sold out. Southern Highlands will be releasing some lots. High rises are coming.”
Market observers are eagerly awaiting Summerlin’s planned luxury development of about 130 luxury custom lots in the northwest section of the master plan. Summerlin officials are in talks with real estate agents and builders about the as-yet-unnamed project but have not yet made an announcement or provided a timeline. Lots are expected to be priced at least $4 million on the lower end.
Dan Colletti, owner of Sun West Custom Homes, agreed that a land shortage likely contributed to the decline in luxury home transactions this year. But Colletti said Askaya in Henderson is one of many homes still in good stock for custom lot sales, where buyers buy land and then hire a builder to design and build the home.
“Land availability for luxury residents is being impacted by a land shortage in the market,” Coletti said. “There are no new listings at Macdonald Highlands and only one at Askaya, so availability is declining rapidly. We’ve also used up all of Discovery. I don’t want to say there is a dire shortage of land for custom homes, but the trend is that there are fewer and fewer custom home lots available and demand is outstripping supply.”
Colletti hasn’t ruled out the possibility that Summerlin developer Howard Hughes Corp. could offer more land for lower-priced luxury housing, as it has done with Ascension.
“For the mass-produced home builders, Summerlin is pulling out all the stops, and who knows what they’ll do to find more land,” Colletti said. “I’m more worried about the custom home market than I am about them, because there’s more money for developers like Summerlin to sell to the mass-produced home builders than there is to the custom home industry.”
Tyler Jones, founder and CEO of Blue Heron, a builder of luxury custom and manufactured homes, said land constraints are something the industry is feeling.
Blue Heron owns eight active communities, including McDonald Highlands, Lake Las Vegas, Southern Highlands and Askaya. Jones said there are plenty of lots available at the moment, but it’s hard to find lots in Henderson with the kind of downtown views that customers want, and there are fewer options in the West Valley.
“It’s a pretty constrained market,” Jones said. “Land supply is definitely a concern over the next few years. There’s not a lot of land left and people continue to move to Las Vegas, so I think that’s going to impact prices. We need to find more locations and we’re actively working on that.”
Jones said Ascension is meeting demand, noting that the project is progressing well and plots are selling out quickly, but he added that because demand is so strong, that won’t last long.
“There’s still a fair bit of land left in Summerlin, and they’re being very strategic and smart about what they’re doing,” Jones said. “They’re not in a rush, but I think we’re going to see a lot more (luxury housing) land in Summerlin over the next few years.”
Jones said the planned construction of Hollywood Studios in Summerlin will further spur demand. He said he has three homes under construction in the valley priced at more than $20 million, with more on the way.
“If that happens, we’ll have a lot more affluent residents who need homes here,” Jones said.
Top-class luxury production builder
The number of luxury home transactions by homebuilders in the first half of 2024 declined overall, with only a few showing slight increases.
■ Toll Brothers led the way with 66 transactions, up from 62 a year ago. The majority of the company’s transactions were in Acadia Ridge, Mesa Ridge and Mira Villas in Summerlin and Bella Strada in Lake Las Vegas.
■ Following Toll Brothers, Lennar came in second with 38 sales, down from 44 a year ago. Sales were spread across The Arches in Summerlin, Elhart Estates and Sonora in the Northwest and Tresor in Henderson.
■ Tri-Pointe Homes sold 24 luxury homes, down from 43 a year ago, with sales mainly in Kings Canyon and Overlook, northwest of Summerlin.
■ Christopher Homes saw 19 sales, the same as 2023. All sales took place in McDonald Highlands.
■ Richmond American was next with 17 sales, down from 24 a year ago. The sales took place in Estrella Park in the northwest and Galway Grove in the southwest.
■ Pulte saw 17 closings, down from 31 a year ago, with sales split between Carmel Cliffs in Summerlin and Del Webb in Lake Las Vegas.
■ Blue Heron closed 10 contracts, up from one home sale last year. The Equinox project at McDonald Highlands in Henderson recorded two of the highest sales this year, one for $10.5 million and another for $6 million. Most of the sales came at the Shoreline project in Lake Las Vegas.
■ Pinnacle closed nine stores, down from 23 a year ago, most of them in Sunset Ridge in the Northwest.
■ Shea Homes had five sales, up from four a year ago, all at Trilogy at Summerlin.
■ Taylor Morrison achieved four sales, up from two last year: four sales at Marbello and Portofino at Lake Las Vegas.
■ Woodside Homes had three sales, up from two a year ago.
■ Landon Miller Homes also saw three sales, down from five a year ago.
■ Century Communities saw two sales, up from one a year ago.
■ Liberty Homes had two sales, down from five a year ago.
■ Jewel Homes, Discovery Builders and Widespread Construction had one each. Widespread Construction sold an $8.5 million home in Askaya, marking the second-highest new home sale on record this year.