The Nevada U-6 unemployment rate fell to 15.2% in Q2, 2015, down 0.1 points since Q1. The U-3, or headline rate, declined by 0.3 points. While these figures are improving, they are still very weak compared to the rest of the nation. The Nevada U-6 rate is 1.2 points behind the second-worst state, California. In terms of the U-3 rate, Nevada continues to rank last. It was 50th of the states in Q2, trailing #49 Arizona by 0.3 points.
On a 12MMA basis, Clark County visitor volume rose in June compared to May, up to 3.45 million. It is up 2.3% year-over-year. The general upward trend in visitor volumes returned during the last three months. We are confident that Southern Nevada’s visitation numbers will continue on an upward trajectory for the rest of the year.
Clark County convention attendance declined in June on a 12MMA basis, to 432,192. This represents a 1.0% decline compared to June 2014. Monthly convention attendance has been between 420,000 and 440,000 for 16 months. The general trend appears to be leveling off.
The 12MMA hotel revenue per available room (RevPAR) in Clark County declined $0.02 in June compared to May to $101.60, essentially unchanged. RevPAR is up 3.2% compared to June 2014 and continues its steady progress back to its 2007 high. (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.)
Total (new and resales) Clark County June home sales (closings), which numbered 4,017 (12MMA), rose by 5.5% from June 2014. Resales saw a 6.7% Y-O-Y jump in June to 3,493, while new homes sales dropped 1.7% to 524.
According to Home Builders Research, the 12MMA median home price (new and resale) for June was $196,651, a 7.3% jump over June 2014. The Y-O-Y median new home price was $300,488, up 5.5% during the last 12 months. The Y-O-Y median resale home price was $180,949 in June, reflecting an 8.5% increase during the last 12 months. However, the combined rate of home appreciation for new and resale homes has slowed considerably during the last year. In June 2014, the Y-O-Y price increase from June 2013 was 21.6%. We believe that resale prices will continue to increase above the rate of inflation through 2015, but that on a moving average basis this increase will be substantially less than it was last year.
The 12MMA Case-Shiller home price index for the Las Vegas MSA reached 137.8 in May, an increase of 8.2% compared to May 2014. This was about one-third of the 24.4% increase recorded between May 2013 and May 2014. These increases are similar to those reported by Homebuilders Research. The rate of growth in the home price index is slowing down, reflecting the same dynamic seen in local housing price data.
The Housing Opportunity Index for the Las Vegas MSA rose for the first time during the last eight quarters in Q2, 2015 from 61.2 last quarter to 61.6 on a moving quarter basis. The U.S. Index also increased from 63.4 to 63.6 during the period. Housing prices appear to be stabilizing, and the improving employment situation may be helping raise the index, as well. 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 60.3.
The prime rate remains at 3.25%. The 10-year treasury bond has decreased slightly in the last month, from 2.20% to 2.17%. The 90-day LIBOR, however, has increased from 0.28 to 0.30. Compared to three months ago, though, both rates are up significantly. Still, these rates remain historically low and are good news for 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. Retail sales hit $3.11 billion in May, up 7.2% compared to May 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. This said, the Y-O-Y growth in taxable sales is been bouncing around in a relatively narrow range late-2011.
According to AAA, as of August 14, the average price per gallon for regular unleaded gasoline dropped by 12.7%, from $3.73 a year before to $3.25. Between July 14 and August 14, the price of unleaded also declined, by $0.04 per gallon, or 1.2%. We expect gas prices to stay relatively stable and less expensive compared to last year through the end of 2015.
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 4.3 in June, on 12MMA basis, compared to 5.4 in June 2014. It is also rising. According to the general consensus, an E-P Ratio above 2.0 and that is going up indicates that the local housing market is healthy.