The Stat Pack
The RCG Employment Index 12-month moving average (“12MMA”) for Clark County increased 0.1 points between September and October to 96.7 and is up 1.2 points compared to October 2014. The index is steadily moving upward as the Valley’s “headline” jobless rate continues to drop. The peak of 99.8 occurred in December 2005.
The 12MMA in Clark County’s headline unemployment rate declined in October to 7.0% compared to September, and it was down 1.1 percentage-points compared to October 2014. The rate’s lowest level in the last 10 years was 4.0%, which occurred in October 2006.
The region’s Y-0-Y job growth rate declined 0.1 points to 3.1%, and was down 0.7 points compared to the 12 months ending October 2014. The most recent spate of growth peaked at 3.9%, and has declined for seven of the last eight months. This is not necessarily a bad sign since the growth slows as the economy nears equilibrium. Additionally, the region’s job growth rate is still about twice the population growth.
Construction jobs in the Las Vegas MSA numbered 50,442 in October (12MMA), representing an increase of 6,175 jobs (13.9%) compared to October 2014. Construction jobs 12MMA peaked at 108,833 in November 2006 when the industry accounted for 11.4% of all jobs.
In October, construction jobs represented 5.8% of the job-base. Construction activity continues to pick up housing and commercial real estate demand rebounds. Jobs in this sector have now grown for 39 straight months.
On a 12MMA basis, Clark County visitor volume rose by 0.48% in October compared to September, to 3.51 million. It was up 2.8 percent year-over-year. We are confident that Southern Nevada’s visitation numbers will continue on a generally upward trajectory for the rest of the year. The month of greatest YOY growth since October 2005 occurred in September 2011, when visitor volume grew by 4.5%.
Clark County convention attendance increased 1.1% in October compared to September (on a 12MMA basis), to 452,666. The peak attendance of 532,943 occurred in May 2007. This represented a 4.3% rise compared to October 2014. The peak in YOY growth occurred in February 2006 when convention attendance grew by 10.5%. The general trend appears to be slowly accelerating.
The 12MMA hotel revenue per available room (RevPAR) in Clark County rose by $1.47 in October compared to September to $104.09. RevPAR is up 3.7% compared to October 2014 and continues its steady progress. The RevPAR peak occurred in December 2007 at $119.43. The rate of growth has been generally slowing over the last year.
Note: RevPAR is a performance metric in the gaming and lodging industry. It is computed by dividing a gaming resort’s total hotel room revenue by the room count and the number of days in the period being measured.
October’s 12MMA gaming revenue (net of baccarat) of $687.0 million decreased 0.16% compared to September ($688.1 million), but was up 2.4% relative to October 2014. That makes six months of Y-O-Y growth of at least 1.5%. The peak revenue of $834.4 million occurred in October 2007.
These 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 typical gaming spending of average Americans. However, 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 October home sales (closings), which numbered 4,106 (12MMA), rose by 9.7% from October 2014. Resales saw a 9.4% Y-O-Y jump in October to 3,558, while new homes sales increased 11.3% to 548. This marked four straight months of increasing Y-O-Y new home sales after 14 months of declines – a good sign for new housing subdivisions.
According to Home Builders Research, the 12MMA median home price (new and resale) in October was $202,989, an 8.8% jump over October 2014. The peak of $305,333 occurred in February 2007.
The median new home price this past October was $307,252, up 5.4% in the last 12 months. The peak of $327,066 occurred in February 2007.
The median resale home price was $186,799 in October, reflecting a 9.6% increase during the last 12 months. The peak of $286,833 occurred in April 2007. By comparison, the Reno-Sparks average resale price for October was $275,327.
The combined rate of home appreciation for new and resale homes has slowed considerably during the last year. In October 2014, the Y-O-Y price increase from October 2013 was 12.5%. The peak of 35.8% occurred in February 2005. The annual housing appreciation rate has slowly picked back up after most recently bottoming out at 5.5% growth in April 2015.
Mirroring the growth in home sales over the last year, the 12MMA 30-year fixed rate mortgage in the Western Region was unchanged at 3.80% in November. The 10-year peak of 6.40% occurred in October 2006. This rate will remain relatively low as the Federal Reserve continues to try to stimulate consumer and business spending and demand, but may start to slowly increase.
The 12MMA Case-Shiller home price index for the Las Vegas MSA reached 140.4 in September, an increase of 6.3% compared to September 2014. This was about one-third of the 18.8% increase recorded between September 2013 and September 2014. The index peaked at 233.2 in December 2006. The highest (44.5%) 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.
The Housing Opportunity Index for the Las Vegas MSA rose for the second quarter in a row in Q3, 2015 after eight quarters in decline. It went from 61.6 last quarter to 61.9 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 61.1.
The U.S. Index also increased from 63.6 to 63.7 during the same period. Housing prices appear to be stabilizing, and the improving employment situation may be helping raise the index, as well.
The prime rate remains at 3.25%. The 10-year treasury bond rate has increased in the last month, from 2.07% to 2.15%. The 90-day LIBOR also increased to 0.39. Lender rates generally increased, as well. Still, these rates remain historically 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 sales in Nevada and Clark County continue to rise, thanks to increased visitation and consumer spending. Taxable retail sales hit $3.17 billion in September, up 6.2% compared to September 2014, on a 12MMA basis. Current taxable sales are the highest ever recorded by the State of Nevada on a nominal basis (not inflation-adjusted).
Retail sales figures are now higher than the pre-recession highs of 2006-2007 and continue to be encouraging for future state and county 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 October rose to $722, a 3.4% increase over October 2014. On an inflation-adjusted basis, earnings are starting to improve, as well, up 3.2% in October compared to October 2014, to $641 in 2007 dollars. It is still $110 (15%) less than the inflation-adjusted peak of $751 occurred in August 2007. The trough occurred in 616.47.
On a 12MMA basis, the number of weekly hours worked in Las Vegas (Clark County) in October held steady at 33.2 hours for the fifth straight month, but was down 0.2 hours from the 33.4 recorded in October 2014. The 7-year peak of 36.9 hours occurred in October 2008. As we’ve noted, stagnant and slowing growing average hours worked have accompanied a dropping headline unemployment rate. At this point in the recovery, Reno is beating Las Vegas.
Implication: Companies continue to depend heavily on part-time workers. For this reason, the U-6 unemployment rate (includes discouraged and part-time workers) in Nevada remains the nation’s highest at 14.8%.
According to AAA, as of December 8, the average price per gallon for regular unleaded gasoline dropped by 11.0%, from $2.86 a year ago to $2.54. Between November 8 and December 8, the price of unleaded also declined, by $0.24 per gallon, or 8.6%. We expect gas prices to remain less expensive compared to last year through the end of 2015. This is the consumer “raise” that keeps on giving.
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 2.7 in September on 12MMA basis, compared to 6.9 in September 2014. According to the general consensus, an E-P Ratio above 2.0 that is declining indicates that the local housing market is approaching a peak.
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