The Las Vegas economy continues to recover following the major loss of jobs that resulted from the pandemic. Over the past three months, the area returned a respectable 23,300 jobs of which almost half were in the hard-hit Leisure and Hospitality industry. Although jobs are returning at a fairly decent pace, it is worth noting that the current employment level is still down 89,000 jobs from the peak prior to COVID-19. The unemployment level in Las Vegas has dropped to 8.2%, significantly lower than the pandemic peak of 33.3%, and I am optimistic the area will return to full employment by the end of next summer.
❱ A total of 10,690 homes sold in the third quarter, which was an increase of 12.3% compared to the same period a year ago. Sales were 4.9% lower than during the second quarter.
❱ Pending sales, which are an indicator of future closings, fell 4.5% compared to the second quarter of the year.
❱ Sales rose in every neighborhood other than Centennial, but the drop there was minor. Transactions rose the most in the Whitney and Southeast Las Vegas market areas, but six additional neighborhoods also experienced double-digit growth.
❱ The drop in pending sales may be a function of rising inventory levels which are giving buyers more choice and allowing them to take more time deciding which home they want to buy.
❱ Home prices rose 20.7% from a year ago to an average of $438,994. Prices were also 2.3% higher than in the second quarter of this year. The rise of prices over the past few years is certainly impacting affordability, which is the lowest it has been since 2018.
❱ Mortgage rates remain competitive, which is causing prices to continue trending higher even as affordability constraints emerge.
❱ Prices rose by double digits in every sub-market other than Spring Valley compared to the same quarter last year. Compared to the second quarter of this year, prices were also higher in every area other than Anthem and Henderson.
❱ Although the economy is improving, affordability will act as a headwind to significant price growth moving forward. When mortgage rates start to tick higher, this too will have a slowing effect on the pace of appreciation.
❱ The average time it took to sell a home in the region fell 24 days compared to the third quarter of 2020.
❱ It took an average of 18 days to sell a home in the third quarter, which was 4 fewer days than in the second quarter of 2021.
❱ Days on market dropped across the board compared to a year ago, and all areas other than Anthem and Queensridge saw market time fall compared to the second quarter of this year.
❱ The greatest drop in market time was in the Aliante market, where the length of time it took to sell a home fell 43 days compared to a year ago.
This speedometer reflects the state of the region’s real estate market using housing inventory, price gains, home sales, interest rates, and larger economic factors.
Jobs in Las Vegas continue to recover, and this should be a stimulant to the housing market. However, higher inventory levels combined with slower sales tells me that we need to look at the impact of rising home prices. Listing prices shot up earlier this year but levelled off and then dropped during the summer. This suggests that sellers realized there is a limit to what their homes are really worth.
As a result, the market may have lost some momentum, but it’s nothing more than a move back to a more realistic pace of home-price appreciation. All things considered, with rising inventory levels and slower price growth, I am moving the needle a little toward buyers. However, it remains a seller’s market.
As Chief Economist for Windermere Real Estate, Matthew Gardner is responsible for analyzing and interpreting economic data and its impact on the real estate market on both a local and national level. Matthew has over 30 years of professional experience both in the U.S. and U.K.
In addition to his day-to-day responsibilities, Matthew sits on the Washington State Governors Council of Economic Advisors; chairs the Board of Trustees at the Washington Center for Real Estate Research at the University of Washington; and is an Advisory Board Member at the Runstad Center for Real Estate Studies at the University of Washington where he also lectures in real estate economics.