The RCG Jobs index 12-month moving average (“12MMA”) for Clark County remained unchanged between July and August at 96.5, but is up 1.4 points compared to August 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 dropped 0.1 points in August to 7.1% compared to July. And, it was down 1.3 percentage-points compared to August 2014. However, the region’s Y-0-Y job growth rate was down 0.1 points from 3.5% compared to July, and was down 0.2 points to 3.4% compared to August 2014. The most recent spate of growth peaked at 3.9%, and growth has declined for five of the last six months. However, this is not necessarily a bad sign since the growth rate is expected to slow as the economy nears equilibrium.
Construction jobs in Southern Nevada (Las Vegas MSA) numbered 49,200 in August (12MMA), representing an increase of 5,508 jobs (12.6%) compared to August 2014. Construction activity continues to pick up. Jobs in this sector have now grown for 37 straight months. Construction jobs 12MMA peaked at 108,833 in November 2006.
Total (new and resales) Clark County July home sales (closings), which numbered 4,054 (12MMA), rose by 6.8% from July 2014. Resales saw a 7.6% Y-O-Y jump in July to 3,523, while new homes sales increased 2.0% to 531. This was the first increase in Y-O-Y new home sales in 15 months – a good sign for new housing subdivisions.
According to Home Builders Research, the 12MMA median home price (new and resale) for July was $198,196, a 7.6% jump over July 2014. The median new home price was $301,815, up 5.2% in the last 12 months. The median resale home price was $182,449 in July, reflecting an 8.7% increase during the last 12 months. The Reno average resale price for July was $266,723.
The combined rate of home appreciation for new and resale homes has slowed considerably during the last year. In July 2014, the Y-O-Y price increase from July 2013 was 19%. We believe that resale prices will continue to increase above the rate of inflation through 2015, but that this increase will be substantially less than it was last year on a moving average basis.
The prime rate remains at 3.25%. The 10-year treasury bond has remained essentially unchanged in the last month, from 2.17% to 2.16%. The 90-day LIBOR, however, has increased from 0.30 to 0.33. Compared to three months ago, the 90-day LIBOR is up significantly. 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 $3.12 billion in June, up 7% compared to June 2014, on a 12MMA basis. Retail sales figures are now higher than the pre-recession highs of 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 August rose to $715, a 2.4% increase over August 2014. On an inflation-adjusted basis, earnings are starting to improve, as well, up 1.9% in August compared to August 2014, to $634 in 2007 dollars. The inflation adjusted peak of $751 occurred in August 2007.
On a 12MMA basis, the number of weekly hours worked in Las Vegas (Clark County) was 33.2 hours in August, unchanged from July and down 0.3 hours from the 33.5 recorded in August 2014. As we’ve noted, stagnant and even dropping 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 15.3%.
According to AAA, as of September 21, the average price per gallon for regular unleaded gasoline dropped by 12.3%, from $3.52 a year ago to $3.08. Between August 21 and September 21, the price of unleaded also declined, by $0.15 per gallon, or 4.5%. We expect gas prices to remain less expensive compared to last year through the end of 2015.