From new home sales and inventory to net sales by price to active housing projects, we’ve got housing stats covered for the Las Vegas Valley.
The RCG Employment Index 12-month moving average (“12MMA”) for Clark County increased 0.1 points between March and April to 97.3 and has been steadily increasing by 0.1 points a month for 7 straight months. When compared to April 2015, the RCG Employment Index is up 1.1 points in April 2016. The index continues edging upward as the Valley’s “headline” jobless rate continues to drop. The RCG Employment Index peaked at 99.8 in November 2006.
The 12MMA of Clark County’s headline unemployment rate has declined by 0.1% for 7 months straight, including this latest month of record, April 2016, when it reached 6.4%. Compared to the previous year of April 2015, the headline unemployment rate has decreased by 1.1%. The rate reached its lowest level in October 2006 when it was just 4%.
Job growth in the Las Vegas MSA is down 0.2 points to 3.1% (12MMA) in April 2016. The region’s YOY job growth rate fell by 0.3 points to 2.3% and is down nearly 2 points from 4.2% in April 2015. Job growth has declined in 8 of the last 12 months, similar to the decline in new jobs at the national level. According to Brookings, this is mainly due to a decline in demand for new unskilled jobs.
Construction jobs in the Las Vegas MSA numbered 52,775 in April (12MMA), gaining 5,600 jobs (11.9%) since April 2015. Construction jobs represented 5.9% of the job-base at the end of April, near the national average. The current number of jobs in construction is still way below the November 2006 peak of 108,833 when the industry accounted for 11.4% of all jobs. This is not necessarily a bad thing since Construction is not considered a “primary industry” and can be volatile.
Construction activity continues to pick up steadily as housing and commercial real estate demand rebound. Jobs in this sector have now grown for 45 straight months.
On a 12MMA basis, Clark County visitor volume remained unchanged in April compared to March, at 3.56 million total. When compared to April 2015 the visitor count is up 3.6% in April 2016. This year is starting off stronger than the last, considering 2016’s visitor total is 14.2 million through April, compared to 13.7 million over the same period in 2015. Southern Nevada’s visitation numbers should continue on an 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 1.25% in April compared to March (on a 12MMA basis) to 503,727. This represents a considerable 13.2% rise compared to April 2015. Over a 12-month period ending in April, total convention attendance was 6,028,212. The monthly peak attendance of 532,943 occurred in May 2007.
Convention attendance has shot up over the past 9 months, nearly equaling the growth of the previous 5 years in that short time. This can be attributed to a stronger national economy and business investments in marketing. The previous peak in YOY growth, now eclipsed, occurred in February 2006 when convention attendance rose by 10.5%. It appears that the current trend of increasing attendance will continue.
The 12MMA hotel revenue per available room (RevPAR) in Clark County is $108.22 in April, an increase of $1.00 (0.93%) from March. RevPAR is up $7.07 (7.0%) compared to April 2015 and continues to grow steadily. The RevPAR peak occurred in December 2007 at $119.43. The yearly rate of growth has been around 3.0 or more since the start of 2011.
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.
April’s 12MMA gaming revenue (net of baccarat) of $694.5 million is a decrease of 0.48% from March, but is up 2.6% compared to April 2015. This makes 12 months of YOY growth of at least 1.5%. The monthly peak ($834.4 million) occurred in October 2007.
These 12 months are the 1st 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 2 reasons: constrained disposable income and changing spending patterns, especially among adults under 35.
Total (new and resales) Clark County home sales (closings) in April, which numbered 4,282 (12MMA), jumped 8.6% over April 2015. Resales saw a 7.9% YOY increase as well to 3,704, while new homes sales increased 13.6% to 578. This was the 10th straight month of increasing YOY new home sales after 14 months of declines.
According to Home Builders Research, the 12MMA median home price (new and resale) in April was $211,125, a 10.1% jump over April 2015. The peak of $305,333 occurred in February 2007.
The median new home price in April was $313,908, up 5.9% from the previous year. The peak of $327,066 occurred in February 2007. The current new home price has recovered to 96% of its pre-recession peak.
The median resale home price was $194,832 in April, a 10.7% increase during the last 12 months. The peak of $286,833 occurred in April 2007. By comparison, the Reno-Sparks average resale price for April was $288,264.
The combined rate of home appreciation for new and resale homes had slowed considerably in mid-2015, but then started to accelerate again. In April 2015, the YOY price increase from 2014 was 5.5%. This is 4.6 points less than the 2016 figure. The annual peak of 35.8% occurred in February 2005.
The 12MMA 30-year fixed rate mortgage in the Western Region fell 0.02 points to 3.83% in May. The 10-year peak of 6.4% occurred in October 2006. This rate should remain relatively low, but may start to increase as the Fed is signaling another rate increase within the next quarter.
The 12MMA Case-Shiller home price index for the Las Vegas MSA reached 144.5 in March, an increase of 6% compared to March 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 trends 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 60 in March, a rise of 12.1% compared to March 2015. However, Las Vegas is still ranked near the bottom of the 100 rated metros. This growth was significantly less than the 23% increase recorded between March 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 (“HOI”) for the Las Vegas MSA rose for the 4th quarter in a row in Q1, 2016 after 8 quarters of decline. It went from 64.2 in Q4, 2015 to 65.1 in Q1, 2016 on a 4-quarter moving average 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 62.9.
The U.S. index decreased from 63.8 to 63.4 from Q4, 2015 to Q1, 2016. Housing prices appear to be stabilizing and if the employment situation continues to improve, we may see the index rise in the future.
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.
The prime rate remains at 3.5%. The 10-year treasury bond rate declined from 1.88% to 1.81%. The 90-day LIBOR remained 0.44. The Life Company, CMBS and Agency rates saw decreases. 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 $3.23 billion in March, up 4.7% compared to March 2015 on a YOY basis using a 12MMA. This year taxable sales total approximately $9.40 billion through March, indicating Clark County is on pace to exceed the 2015 total of $38.6 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 April increased by approximately $2 to $731 compared to March and is $26 (3.7%) higher than in April 2015. On an inflation-adjusted basis, earnings continue to improve as well, increasing by 3.2% in April compared to April 2015 to $646 (in 2007 dollars). Still, Las Vegas’ average weekly wage remains $105 (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 April remained 33.1 and fell 0.1 points from April 2015. 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 13.4% as of Q1, 2016.
According to AAA, as of May 31, the price of regular unleaded fuel increased by $0.01 from $2.43 a month ago, an insignificant change. When compared to the previous year, the average price per gallon for regular unleaded gasoline declined drastically by 26.3%, from $3.31 to $2.44.
The price of gas has remained steady over the last 3 months, based on information coming out of Saudi Arabia. Gas prices should remain relatively low with OPEC nations hurting for revenues and US producers slightly increasing output.
Electric meter hookups’ 12MMA in March reached 785,970. Total hookups were up 1.9% over March 2015. The annual growth rate has been increasing slowly over the last 8 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 rose slightly by 0.1 points to 1.6 in March on 12MMA basis. When compared to March 2015 the E-P Ratio dropped 1.3 points from 2.9. According to the general consensus, an E-P Ratio between 1.0 and 2.0 that is level indicates a stable market.
The chart above describes housing sales per project compared to housing inventory for the six Home Builder Research (“HBR”) submarkets as of May. HBR data show that relative to each submarket, the East submarket has high sales and is running low on inventory. North Las Vegas projects also have relatively high sales volumes, as well as a healthier level of inventory. Henderson, Southwest and South submarkets show relatively moderate sales with moderate inventories. In the Northwest, however, we see that low sales accompanied by a glut of available new homes.
Las Vegas MSA net new home sales, by price range, show that units in the $200s are selling the best with 365 sales in May. However, more expensive homes in the $300s are also selling relatively well, registering 232 sales in May. Even more expensive homes — those in the $400s (84 sales) and $500k to $750k (40 sales) — both outsold inexpensive sub-$200k homes, which logged just 37 sales. High prices homes going for $750k and more sold 8 units. These trends are largely due to the lack of product below $200k (due to high construction costs) and buyer preference for units in the middle and upper price ranges.
Active new home developments in the region have continued to increase, from 201 in May 2015 to 245 in May 2016. This is a Y-O-Y increase of 21.9%. Housing sales have picked up and, according to housing prices provided by HBR, the housing market is near equilibrium.