Nevada Housing Market 2023 Report
What is the Nevada Housing Market Like?
The Nevada housing market is highly speculative and has often made the headlines for its cycle of highs and lows. However, it has been improving consistently since the Great Depression and even more so since the COVID-19 pandemic. Newcomers from out of state, particularly from nearby California, flocked to Nevada as remote work became widespread, attracted by the significantly lower cost of living and relatively affordable Nevada home prices. Nevada remains one of the most attractive states for households looking to move out of state, with 7,000 more people looking to move to Nevada between September 20222 and November 2022 than residents looking to relocate out of state.
According to data collected in October 2022, the latest available at the time of writing, Nevada housing prices continue their upward trajectory despite the sharp increase in mortgage rates following the aggressive interest rate hiking policy initiated by the Federal Reserve Bank as a means to fight back against inflation. The median sale price in Nevada stood at $432,200 in October 2022, 7.5% more than the year before.
Nevertheless, the Nevada housing market is showing signs of cooling down rapidly. The number of real estate transactions is crashing fast, with only 3.026 houses sold in October 2022, 40.8% less than last year. Besides, only 14.9% of homes are selling above the asking price compared to 42.8% the year before. Properties for sale spend significantly longer on the market, with a median number of days on the market of 55 compared to 27 in October 2022. The housing inventory is also, at long last, catching up to the demand. There were 18,974 homes for sale in October 2022, 30.1% more than the year before.
How does the Nevada Housing Market Compare to the National Housing Market?
The Nevada housing market is one of the few nationwide that can be considered to be a balanced market, with five months of housing inventory available compared to one last year, indicating that the rising interest rates are taking a toll on the Nevada housing market.
In March 2022, the Federal Reserve Bank initiated an aggressive monetary policy in an effort to curb inflation that stood at a 40-year high. After years of standing near historic lows, the 30-year fixed mortgage rate skyrocketed to hover around 7% as of December 2022, nearly twice as high as they were a year before. Therefore, would-be home buyers in Nevada and elsewhere must contend with a combination of high interest rates, high property prices, and a rapidly increasing cost of living. Some house hunters found themselves priced out of the market while others are postponing their home-buying plans as they wait for more favorable interest rates, leading to a sharp decline in demand and the overall number of sales.
Therefore, this respite has allowed the housing inventory to catch up with the demand. Nevada home prices are still rising, but at a slower and more sustainable rate than they were in the months prior.
Nevada Metro Areas with the Hottest Housing Markets
Nevada may be the seventh-largest state in terms of surface, but it is also the 9th-least densely populated of the U.S. states, with nearly three-quarters of Nevada's residents living in Clark County, which contains the Las Vegas–Paradise metropolitan area. Most of Nevada is semi-arid desert and mountainous in the Sierra Nevada region. The economy of Nevada is tied to tourism (especially entertainment and gambling-related), mining, and cattle ranching. Here are the hottest real estate markets in Nevada in terms of volume.
- Las Vegas
Las Vegas, a.k.a. The Entertainment Capital of the World, is the most populous city in Nevada, with a population of 641,903 residents, according to the 2020 U.S. Census. The Las Vegas Valley as a whole serves as the leading financial, commercial, and cultural center for Nevada, although the official state capital of Nevada is Carson City. Between September 2022 and November 2022, it was the second most searched destination among homebuyers looking to relocate. Despite a noticeable slowdown, the Las Vegas housing market remains competitive, with listed properties receiving two offers on average. 15.7% of listings sold above the asking price in October 2022, and the median sale price is still rising, although at a significantly slower pace, reaching $390,000 in October 2022, 6.4% more than the previous year.
Henderson is part of the Las Vegas Valley and is the second largest city in Nevada, after Las Vegas, with an estimated population of 320,189 in 2019. Like its more populated neighbor, the economy in Henderson is primarily based on entertainment and gambling. The Henderson housing market is competitive, and houses for sale receive two offers on average. Henderson home prices are still on their way up at the time of writing. As of October 2022, the median sale price had reached $475,000, 5.6% more than in October 2021, and 13.0% of listed properties sold above the asking price.
Reno is the third-largest city in Nevada, with a population of 264,165 at the 2020 census. The city has been the object of large-scale investments from Greater Seattle and San Francisco Bay Area companies such as Amazon, Tesla, Panasonic, Microsoft, Apple, and Google and has therefore become a new major technology center in the United States. The housing market in Reno is relatively balanced. Listed properties receive one offer on average. Reno home prices are still climbing. According to October 2022 data, the median sale price in Reno was $520,000, 6.1% more than in October 2021, and 18.1% of houses for sale sold above the asking price.
Higher Mortgage Rates Could Slow Down the Price Growth in Nevada
Nevada home prices have been increasing steadily for the past ten years, with a sharp acceleration during the COVID-19 pandemic when Nevada housing prices increased in the double digits in a year-over-year comparison, but at a slower pace than in other parts of the country. However, Nevada house prices have started to decelerate since May 2022, as in most of the country, following the aggressive interest rate hiking policy initiated by the Fed. Nevertheless, at the time of the writing, Nevada home prices are still following an upward trajectory, albeit at a much slower pace than in previous months.
The demand for housing in Nevada remains strong and is sustaining high property prices. Nevada continues to be one of the top destinations for households looking to relocate, particularly from high-price areas such as California. However, for the first time since the height of the pandemic in May 2020, the Nevada housing market appears to be balanced with five months of housing inventory available. Therefore, home prices in Nevada should stabilize as competition decreases.
Key Market Stats for the Nevada Housing Market
According to October 2022 data, some of the key market stats for the Nevada housing market appear as follows:
- Median home price: $432,600 – a 7.5% Y.o.Y. increase.
- Home sales: 3,026 – 40.8% less than a year ago.
- Months supply of inventory: 5 – compared to 1 in October 2022.
- Mortgage rates as of December 1st, 2022: 6.49%
Nevada Historic Price Changes and Affordability
Like most of the country, Nevada home prices have been increasing in recent years, accelerating during the COVID-19 pandemic. The median home price in Nevada has increased from $305,700 in October 2019 to $432,600 in October 2022, with a peak of $467,000 in May 2022, representing a 41.51% increase in 36 months.
Although Nevada house prices are higher than the national average, they remain more affordable than some of the neighboring states, such as California or the Pacific Northwest, and Nevada is one of the primary destinations for remote workers who are not tied to their place of employment and are looking to relocate to more affordable areas. The influx of newcomers is sustaining relatively high property prices, although the available inventory is rapidly catching up. Therefore, we can expect the market to correct in the coming months.
- Nevada is the second most popular state for homeowners who are considering relocating to another state.
- The housing inventory is catching up, with longer time spent on the market and fewer transactions, and is likely to lead to a decrease or deceleration of Nevada home prices.
- Nevertheless, at the time of writing, Nevada housing prices are still increasing, although at a slower pace than in previous months.