T
he Las Vegas housing market is experiencing a significant slowdown, with inventory growing at a rate not seen anywhere else in the country. Home sales have been falling for months, and pending home sales dropped 8.6% year over year in July. The typical home sold in July took 55 days to go under contract, 16 days longer than a year earlier.

    The main reason for this slowdown is affordability. Most homes are unaffordable for locals, with only 20% of listings priced within reach of the median income household. Renting is more affordable, with a median monthly rent of $1,586 compared to a typical mortgage payment of $2,472 per month. This has led some would-be first-time homebuyers to consider rentals.

    Tourism, which accounts for a significant portion of Las Vegas' economy, is also suffering due to economic uncertainty. The number of visitors dropped 11% year over year in June, and Americans are spending less on discretionary items like travel. Historically, the Las Vegas housing market has been volatile, with a crash during the 2008 financial crisis and a boom during the pandemic.

    Additionally, strict short-term rental rules have made it less attractive to own a rental property, leading some owners to put their properties on the market. This has contributed to the growing inventory of homes for sale.

    According to Redfin's head of economics research, Chen Zhao, "Las Vegas is feeling the effects of affordability pressures and elevated mortgage rates more acutely than many other markets." However, with so many homes on the market and slow demand, buyers may be able to negotiate prices down. Mortgage rates have also dropped near their lowest level in 10 months, making it a good time for buyers.

    Some local agents are reporting an uptick in buyers over the last several weeks as mortgage rates have declined. Cherra Bergman, a Redfin Premier agent in Las Vegas, said that savvy buyers know there are many homes on the market and can get a better deal now than two or three years ago.

    The growing supply of homes has started to push down sale prices, with the typical home selling for $445,000 in July, a 1% decline year over year. This is the first decline since September 2023. Some would-be sellers are backing off as they come to terms with slow demand and stagnating prices. New listings have also dropped 5.7% year over year in July, marking the second month of declines after nearly two years of increases.