The Southern Nevada economy posted positive growth in the latter half of 2022 as employment eclipsed pre-pandemic levels and visitation edged closer to usual volumes. For the most part, the economy appears to be moving on from the aftereffects of the COVID-19 pandemic, but concerns over rising inflation and diminished consumer confidence are certainly not to be ignored.
Total employment reached 1,066,900 in September 2022 (latest available data), a 5.0 percent growth rate from one year ago. These latest employment figures mark a recovery of all jobs lost during the height of the COVID-19 pandemic, plus the addition of 17,200 new positions. Nationwide, Las Vegas ranked in the top ten percent of metropolitan areas with the fastest year-over-year growth (compared to 351 metro areas).
Further, employment growth in the Las Vegas area outpaced the average United States’ growth rate of 3.7 percent (September 2022). On the unemployment side of the equation, the overall unemployment rate for the region in September 2022 fell for the third straight month to 5.3 percent, marking a 1.3 percentage point decline compared to the previous year.
Despite significant improvement from the low point witnessed in April 2020 (31.1 percent), the unemployment rate remains elevated by 1.8 percentage points from the pre-pandemic peak of 3.5 percent (February 2020). Compared to all large metro areas, Las Vegas holds the highest unemployment rate and lags behind the national unemployment rate by 2.0 percentage points.
Visitation picked up in September 2022 following a slow August, with 3.4 million visitors coming to Southern Nevada, up 14.3 percent on the year. On a trailing 12-month basis, visitation reached 38.1 million, up 39.4 percent from one year ago and the highest value experienced since March 2020.
Traffic at Harry Reid International Airport has trended similarly, with 4.8 million passengers coming through its gates in September 2022, up 25.9 percent year-over-year. September’s passenger volume was the second-highest month in history, falling just 2.2 percent behind the record-setting 4.9 million passengers observed in July 2022. Further, 50.6 million passengers have moved through the airport in the last 12 months, a value not seen since February 2020.
As a result of the increased visitation in September, hotel occupancy increased to 83.1 percent (+10.1 year-over-year), while revenue per available room (RevPAR) swelled to a record of $155.55 (+36.8 percent year-over-year). Meanwhile, gaming activity has continued to trend upward, posting revenues of $1.1 billion in September 2022, up 5.6 percent from the previous year. This marks the fifth consecutive month of revenues above $1.0 billion in Clark County, contributing to all-time high trailing 12-month revenues of $12.7 billion (+25.6 percent year-over-year).
Despite these gains, convention attendance remained muted but continues to recover from the effects of pandemic-related interruptions. In the 12 months ending September, 4.6 million convention attendees visited Southern Nevada, down 31.8 percent from the pre-pandemic peak of 6.7 million convention attendees in February 2020.
After more than two years of consistent price hikes and sky-high sales volumes, the Southern Nevada housing market has seen some significant changes in the past few months. The median price for single-family homes peaked in May 2022 at $482,000 but has declined by 8.7 percent over the last five months to $440,000. However, median prices represent a year-over-year growth rate of 7.3 percent. Sales volumes have also fallen, with 1,724 single-family home sales recorded in the latest period, down 44.0 percent from one year ago.
Meanwhile, availability has loosened as the effective months of available inventory increased to 4.6 in October, up from 1.1 months during the same time last year. Importantly, the absolute number of homes listed for sale has held in a tight range of about 10,000 units (single-family and multi-family properties). The shift in housing market conditions is largely the result of rising mortgage interest rates and broader housing affordability challenges.
Rising mortgage rates have been impacted by inflationary pressures and the Federal Reserve’s response with rising interest rates. After holding the federal funds target rate at historically low levels for two years, the Federal Reserve has raised the rate six times in 2022. This has translated into escalating mortgage interest rates. The average 15-year and 30-year fixed mortgage rates climbed to 6.15 percent and 6.90 percent, respectively, as of October 2022.
While rising mortgage rates have cooled homebuyer demand, the Southern Nevada housing market benefits from strong in-migration metrics, especially from its western neighbor California. During the 12 months ending September 2022, Clark County welcomed 73,721 new residents (measured by exchanged out-of-state driver’s licenses). California maintained the top spot for the highest share of newcomers, accounting for 38.7 percent of all incoming residents. Other top states driving in-migration to Clark County include Florida, with a 4.9 percent share of all license surrenders, Texas (4.6 percent), Washington (4.4 percent) and Arizona (4.2 percent).
Broad economic measures in Southern Nevada remain on a path for recovery despite potential headwinds. During the last quarter, employment continued to improve while the unemployment rate dropped. The tourism industry has also seen increasing visitor volumes, as well as rising room occupancy and rates. With inflation at a 40-year high and talks of a potential recession gaining traction, it will be important for the region to continue to press forward during the final months of 2022.