The Stat Pack
The average price per gallon for regular unleaded gasoline in the Las Vegas MSA shot up by $0.50 per gallon, or 25.6%, between February 29 and March 30, but it is the only Southern Nevada economic metric not trending positively.
Clark County’s headline unemployment rate was down 0.9 percentage-points in February compared to a year ago. The region’s growth rate is still good but declined slightly (0.2 points) to 3.4% in February, down one point compared to the 12 months ending in February 2015. (This is not necessarily a negative, as jobs continue to grow faster than population.)
Construction jobs in the Las Vegas MSA numbered 51,733 in February, representing a spike of 5,425 jobs (11.7%) compared to February 2015. Construction activity continues to pick up steadily as housing and commercial real estate demand rebounds. Jobs in this sector have now grown for 43 straight months.
Average weekly earnings (not inflation-adjusted) in the Las Vegas MSA in February rose to $730, a 4.0% increase over February 2015. On an inflation-adjusted basis, earnings continue to improve, as well, up 3.6% in February compared to February 2014, to $645 (in 2007 dollars).
For more stats and trends, see below.
The RCG Employment Index 12-month moving average (“12MMA”) for Clark County increased 0.2 points between January and February to 97.1 and is up 1 point compared to February 2015. The index is steadily moving upward as the Valley’s “headline” jobless rate continues to drop. It peaked at 99.8 in November 2006.
The 12MMA in Clark County’s headline unemployment rate declined 0.1% in February compared to January, but it was down 0.9 percentage-points compared to February 2015. The rate’s lowest level in the last 10 years was 4%, which occurred in October 2006.
The region’s Y-0-Y job growth rate declined 0.2 points to 3.4% in February, down 1 point compared to the 12 months ending in February 2015. The most recent spate of growth peaked at 4%, and has declined for nine of the last 10 months. This is not necessarily a bad sign as jobs continue to grow faster than population.
The most recent population estimates from Clark County Comprehensive Planning were released for 2015. They show that the region’s employment-to-population ratio for last year rose 0.5 percentage-points over 2014. The current E-P ratio is now 0.9% below the 2008 peak.
Construction jobs in the Las Vegas MSA numbered 51,733 in February (12MMA), representing a spike of 5,425 jobs (11.7%) compared to February 2015. Construction jobs represented 5.8% of the job-base at the end of February. Construction employment peaked at 108,833 in November 2006 when the industry accounted for 11.4% of all jobs.
Construction activity continues to pick up steadily as housing and commercial real estate demand rebounds. Jobs in this sector have now grown for 43 straight months.
On a 12MMA basis, Clark County visitor volume rose by 0.4% in February compared to January, to 3.55 million. The rolling annual total was 42,312,216 visitors at the end of 2015. February’s visitor count was up 3.4 percent compared to February 2015. Southern Nevada’s visitation numbers should continue on a generally upward trajectory for the time being. The month of greatest YOY growth since October 2005 occurred in September 2011, when visitor volume grew by 4.5%.
Monthly Clark County convention attendance increased 1% in February compared to January (on a 12MMA basis) to 487,768. This represents a 10.3% rise compared to February 2015. This equates to a 12-month total of 5,462,967. The monthly peak attendance 532,943 occurred in May 2007. The peak in YOY growth occurred in February 2006 when convention attendance rose by 10.5%. The general trend appears to be increasing.
The 12MMA hotel revenue per available room (RevPAR) in Clark County rose by $0.63 (0.59%) in February compared to January to $106.80. RevPAR is up $4.38 (4.3%) compared to February 2015 and continues its steady progress. The RevPAR peak occurred in December 2007 at $119.43. The yearly rate of growth has been around 3.0 or more since the end of 2010.
Note: RevPAR is a performance metric in the gaming and lodging industry. It is computed by dividing a resort’s or hotel’s room revenue by the room count and the number of days in the period being measured.
February’s 12MMA gaming revenue (net of baccarat) of $700.1 million is an increase of 5.4 million from January, and is up 3.9% compared to February 2015. This makes 10 months of Y-O-Y growth of at least 1.5%. The monthly peak ($834.4 million) occurred in October 2007.
These 10 months are the first consecutive months of such growth since May 2012 (13 months). The net baccarat revenues are largely comprised of slot revenues, which generally reflect wagering of typical gamblers, especially U.S. gamblers. Slot revenues continue to remain lackluster for two reasons: constrained disposable income and changing spending patterns, especially among adults under 35.
Total (new and resales) Clark County February home sales (closings), which numbered 4,250 (12MMA), spiked by 12.6% above February 2015. Resales saw a 12.4% Y-O-Y jump as well to 3,683, while new homes sales increased 13.6% to 567. This marked 8 straight months of increasing Y-O-Y new home sales after 14 months of declines.
According to Home Builders Research, the 12MMA median home price (new and resale) in February was $209,284, a 10.2% jump over February 2016. The peak of $305,333 occurred in February 2007.
The median new home price in February was $312,249, up 6.8% in the last 12 months. The peak of $327,066 occurred in February 2007. The current new home price has recovered 95% of its pre-recession peak.
The median resale home price was $193,166 in February, reflecting a 10.9% increase during the last 12 months. The peak of $286,833 occurred in April 2007. By comparison, the Reno-Sparks average resale price for February was $290,000.
The combined rate of home appreciation for new and resale homes had slowed considerably in mid-2015, but then started to accelerate again. In February 2015, the Y-O-Y price increase from 2014 was 6.4%. This is 3.8% less than the 2016 figure. The annual peak of 35.8% occurred in February 2005.
The 12MMA Case-Shiller home price index for the Las Vegas MSA reached 143 in January, an increase of 5.9% compared to January 2014-2015. This was about half of the 11.6% increase recorded between February 2014 and 2015. The index peaked at 233.2 in December 2006. The highest (44.5%) annual change in the index occurred in March 2005 and the trough (-31.8%) occurred in August 2009. These increases are similar to those reported by Home Builders Research.
Freddie Mac’s 12MMA Multi-Indicator Market index (MIMI) for the Las Vegas MSA increased to 58.4 in January, a rise of 11.7% compared to January 2015. However, Las Vegas is still ranked near the bottom of the 100 rated metros. This rise in growth was about one-third of the 29.1% increase recorded between January 2014 and 2015, much like with the Case-Shiller index. The index peaked at 148.3 in July 2006. The highest (44.7%) change in the index occurred in May 2014 and the trough (-51.2%) occurred in December 2009.
The MIMI index measures the stability of local housing activity by combining current local market data with Freddie Mac data; specifically, by looking at home purchase applications, payment-to-income ratios (changes in home purchasing power based on house prices, mortgage rates and household income), proportion of current mortgage payments in each market (healthy loans vs loans in default), and the local employment picture.
The Housing Opportunity Index for the Las Vegas MSA rose for the third quarter in a row in Q4, 2015 after eight quarters in decline. It went from 61.9 last quarter to 64.2 on a moving quarter basis. The Las Vegas HOI peaked at 86.2 in Q1, 2012. It bottomed out at 15.4 in Q1, 2007 at the height of the housing boom. The 10-year average is 61.9.
The U.S. Index also increased from 63.7 to 63.8 during the same period. Housing prices appear to be stabilizing, and the improving employment situation may be helping raise the index, as well.
The HOI is based on the share of homes sold that are affordable to a family earning the median income in Clark County, assuming standard mortgage underwriting criteria.
After the Fed’s December action, the prime rate increased a half-point to 3.5%. The 10-year treasury bond rate declined after two months of slight elevation. It is now, as of April 1, at 1.70, down from 1.77% one month before. The 90-day LIBOR remained at 0.44. Lender rates saw little movement. Still, these rates remain relatively low and benefit the commercial real estate industry in terms of the cost of borrowing. The challenge: excess capacity, especially in the office market, plus only moderate job growth.
Taxable retail sales in Nevada and Clark County continue to rise, thanks to increased visitation, as well as local resident and business spending. But, the YOY change is slowing as the local economy normalizes. Sales hit $3.21 billion in January, up 5% compared to January 2015 on a 12MMA basis. The total for 2015 was $37.6 billion. Current taxable sales are the highest ever recorded by the State of Nevada on a nominal basis (not inflation-adjusted). As such, they have boosted local and state government budgets. Steadily improving local, regional and national job markets are key to this improvement. This is especially true regarding the regional and national job markets since they are primary drivers of tourism spending in the region.
Las Vegas MSA 12MMA average weekly earnings (not inflation-adjusted) in February rose to $730, a 4.0% increase over February 2015. On an inflation-adjusted basis, earnings continue to improve, as well, up 3.6% in February compared to February 2014, to $645 (in 2007 dollars). However, Las Vegas’ average weekly wage is still $106 (14%) lower than the inflation-adjusted peak of $751 that occurred in August 2007. The trough occurred in February 2012 at just over $616.
On a 12MMA basis, the average number of weekly hours worked in Las Vegas (Clark County) in February remained unchanged at 33.3 and declined 0.1 from February 2015. This is the second consecutive negative YOY change in average weekly hours. The 7-year peak of 36.9 hours occurred in October 2008. As we’ve noted, stagnant and declining average hours worked have, at least, been accompanied by a dropping headline unemployment rate implying that more steady hourly increases may be finally coming. At this point in the recovery, however, Reno is beating Las Vegas.
Implication: Companies continue to depend heavily on part-time workers. For this reason, Nevada’s U-6 unemployment rate (includes discouraged and part-time workers) remained the nation’s highest at 13.9% as of Q4.
According to AAA, as of March 30, the average price per gallon for regular unleaded gasoline declined notably by 12.5%, from $2.80 a year ago to $2.45. However, this year between February 29 and March 30, the price of gasoline shot up by $0.50 per gallon, or 25.6%.
With Iran’s surprise return to the oil markets after the lifting of embargos due to compliance with the nuke deal, more cheap crude has flooded into the market, depressing already low prices. After this shock to the market, fuel prices should level off compared to a year ago. The price of oil is currently in limbo, depending on whether the Saudis decide to cut production or continue to keep prices low. For the time being, we expect gas prices to hover near that of a year ago.
Electric meter hookups’ 12MMA in December reached 781,941. Total hookups were up 1.8% over December 2014. The annual growth rate has been slowly increasing over the last 5 months and has been at least 1.5% since June 2014. The annual peak growth rate occurred March 1990 at 10.5%. This hints at increased population growth and household formations in the Valley.
A well-known housing market indicator is the employment-to-housing permit ratio or E-P Ratio. The E-P Ratio for Clark County was 1.6 in January on 12MMA basis, compared to 3.4 in January 2015. According to the general consensus, an E-P Ratio between 1.0 and 2.0 that is declining indicates that a downturn may be approaching. We await the annual job number recalibration to see if this trend bears out.
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