Inventory of homes for sale climbs in Clark County, but demand still outpaces supply, pros say

Rates affect market

Two years ago was a tough time for people looking to buy a home in Clark County. In 2021, inventory averaged 543 homes for sale per month. Then, inventory started to rise in 2022 and 2023 with averages of 886 and 964 residential listings a month.

To fight inflation, the Federal Reserve raised interest rates in March 2022 for the first time since 2018. Higher interest rates made it more expensive for banks to borrow, consequently causing them to raise mortgage rates. The Federal Reserve raised rates several more times that year.

“It caused a reset,” Lamb said. “There were people who saw their cost for housing increase dramatically with those rate increases.”

High interest rates can weaken demand and prompt homeowners with adjustable-rate mortgages (which often start off with a lower initial interest rate but are subject to the whims of market conditions) to sell, increasing inventory.

Terry Wollam, a broker at Wollam & Associates, believes that if interest rates hold, Clark County may be on the path to a healthier, pre-pandemic market. However, the Federal Reserve plans to cut interest rates three times this year. That will make homeownership more affordable but may decrease inventory.

“When that happens, I would expect that we see the number of sales increase, and then we’re going to get back to a very similar situation that we were in, let’s say, 2022,” Wollam said.

Still unhealthy

Even with the number of homes for sale averaging around 1,100 over the last six months, that’s still nowhere near a healthy level of inventory, Lamb and Wollam said. Clark County’s inventory is about 33 percent less than it was this time in 2019.

Lamb has worked as a broker in Clark County for 40 years.

“Over my career, it was normal to have four, five, six thousand listings,” he said. “I think it’s going to go down this month because we have more sales and fewer new listings than sales. We’re going to continue to eat into this.”

Times have changed. Clark County’s population is growing faster than enough homes can be built or sold. Land is scarce. And as long as interest rates are high, people with fixed-rate mortgages are likely going to hold onto the homes they bought during a time of low interest rates, Lamb said.

“The characteristic feature of this market is low inventory and strong demand,” Lamb said. “As long as employment stays up and people are moving into the area, we’re going to continue to have an issue with inventory. It’s not going to go away anytime soon.”

New construction

New construction makes up almost half of active residential listings now, compared with before the pandemic, when new construction only represented about a quarter of inventory, Wollam said.

“The reality is, even though new construction is making up a greater percentage, we need more new construction, or more than we actually have, to continue to get us up to a stronger inventory level to be able to meet the demand,” Wollam said.

The problem is, new construction can be expensive, especially with recent state building code updates meant to improve energy efficiency that went into effect on March 15, Wollam said. Although the codes will help reduce climate impacts, and the homes may be energy efficient, they are likely to be more expensive to purchase.

“Given the fact new construction makes up so much of the inventory, buyers should be aware that they’re going to see price increases come relative to the energy code update,” Wollam said.