Many aren't expecting a quick recovery for the Las Vegas housing market, but traffic is up and so are sales per subdivision. That sparks hope that the new-home market has seen its bottom and only has one direction to go - up, albeit slowly.

Astoria Homes reported its March sales were better than January and February combined. The last week of March was probably the best month the builder has had in more than a year, company President Tom McCormick said. The builder is launching a luxury home division and hiring staff despite the housing slowdown.

"Through 2006 and 2007 it felt like head winds, but now it feels like tail winds," McCormick said. "It is hard for me not to think that the new-home market isn't improving by the second half of the year."

Credit remains tight but people with jobs, a down payment and good credit are able to get loans. The cancellation rate of 28 percent in March was the lowest since February 2007, according to Home Builders Research.

Some analysts and builders have suggested that the best time to buy a new home may have already passed. Builders had been offering both discounted prices and incentives, but with inventories whittled to next to nothing, some builders are dropping incentives such as paying for closing costs and upgrades and focusing on low prices.

SalesTraq reported the median price of single-family homes fell to $266,135 in March, about $5,500 lower than February and 16 percent below March 2007. Home Builders Research pegged the March price at $259,940, down 18 percent.

"I think this is the bottom, and if you don't go out and buy now, you can't expect it to get any better," Home Builders Research President Dennis Smith said.

Brian Plaster, president of Signature Custom Homes, said incentives were a more popular tool last year when builders had more standing inventory. Home Builders Research estimates the unsold inventory of new homes in March was 1,400 to 1,500 and as low as 1,000 when excluding age-restricted homes.

"Incentives are used more when you have a lot of standing inventory," Plaster said. "I think the whole market now is driven by price. If you look at all the tracts that have the most sales, it is in the $150,000 to $200,000 price range."

Las Vegas housing analyst Steve Bottfeld said builders aren't including swimming pools, landscaping and other upgrades because prices are valued more by buyers these days. The usually optimistic Bottfeld said if the best new-home deals aren't over, they will be soon because sales could improve by the second half of 2008. Prices have held steady since November after falling sharply in 2007, he said.

McCormick, who says his company still offers closing costs to buyers, says builders' rock-bottom prices will start to disappear when sales improve.

"Some of the people who I trust and respect a lot say ... that is a sign everything is going to come to an end," McCormick said. "We know of builders who have gone to straight price and no incentive, but the price is really low. What it looks like they are doing is setting a floor to start building back up again."

It's not known when builders will start ramping up construction again. Some analysts suggest the dwindling inventory of new homes will push more buyers to consider existing homes and help cut into that supply, which is estimated at seven months, according to SalesTraq. Reducing the existing-home inventory is considered crucial to the housing market's recovery and it will open the door for builders to start a new wave of construction.

During the first three months of this year, 1,151 permits were issued, according to SalesTraq. More than 3,500 permits were issued during the same period in 2007.

Smith says not everyone wants an existing home and with many foreclosure properties requiring extensive repair, he says he foresees a bump in new-home construction, although builders will be cautious.

"If they don't start pulling more permits in the next two to three months, you will see a shortage of new homes," Smith said. "But I think they are going to be slow because they were wounded so bad. Some who were building 2,000 to 3,000 a year during the boom are doing closer to 500 now."

Tim Sullivan, president of Sullivan Real Estate Advisors, said builders will wait until the existing-home inventory is reduced before they start constructing homes in larger numbers. That may not be until 2009, he said.

McCormick is more optimistic.

With 440 neighborhoods in Las Vegas that sell suburban-style housing, about 85 of those have fewer than 10 homes left in them, McCormick said. Even at two or three a month, they will be gone in six months, and nobody is opening anything new, he said.

"There is no new land in the marketplace, and so the supply is going to go down, which again demand should start to improve as we get closer toward the end of the year," McCormick said. "I can't find anything beyond a broad-based recession or really high interest rates - which just don't look likely - to say why this market doesn't improve."

KB Home, which is still building about 30 homes a week in Las Vegas, has seen sales rise. It's all about price, said Don Del Giorno, division president, who says with little inventory on hand the builder isn't offering incentives like it had. Instead, KB is focusing are guaranteeing buyers a lower price at closing if prices drop further.

"It has picked up, but whether that is seasonal or the market is changing, I have trouble making that call, he said. "But I am optimistic going into next year. The local market has never been through anything like this since I have been here, but I think we are going to be quicker to recover with the job creation we have here."

Brian Wargo covers Real Estate and Development for In Business Las Vegas and its sister publication, the Las Vegas Sun. He can be reached at 259-4011 or at wargo@lasvegassun.com.