A surging housing market defying its typical seasonal slump and an unemployment rate steadying after the recession provide optimism for Southern Nevada’s economy in 2017.
UNLV’s Center for Business and Economic Research (CBER) released Wednesday its quarterly business survey. The report indicates local business owners and leaders expect continued recovery in the local economy to mirror that of the national picture.
The Southern Nevada Business Confidence Index bumped slightly upward in the second quarter, increasing 1.3 percent to 137.2 from the first quarter of the year. The base measurement for the index is 100, the point at which respondents generally feel more positively than negatively about economic conditions.
“The local economy should see another favorable year in 2017, as the Southern Nevada economy benefits from the strengthening of the U.S. economy,” the report finds.
The survey predicts continued growth in local housing prices following a rare winter upswing that saw the median resale price climb to $242,000 — a remarkable increase from $123,000 just five years earlier. That out-of-season growth appears driven by a continued short supply of available houses running about 50 percent below what is considered healthy for the market.
Housing starts grew in 2016 as well, with single-family permits jumping 12.1 percent and multi-family/apartment permits leaping 70 percent from a year earlier. That led to 13,546 units added, the most yearly growth since 2008.
“The housing market is anticipated to continue its strong pick-up in 2017, but the expected upward movement in interest rates can be a headwind,” the report reads.
Interest rates could move upward at least two more times this year.
Shrinking unemployment also inspired confidence among respondents. The unemployment rate fell to 4.9 percent at the end of 2016, marking its lowest level since November 2007, before ticking up to 5.1 percent in February. Personal income also advanced in 2016, posting 5.9 percent growth — also the strongest since 2007.
“The optimistic outlook on hiring also implies that employment should continue to expand,” the report concludes.
The report ultimately finds an “optimistic” outlook for the coming year.
“Higher expectations on sales, profits, and capital expenditures suggest that the Southern Nevada economy will continue to move in a positive direction,” the report finds.