Construction continues Tuesday on a Centex Homes development on North Tropical Downs in North Las Vegas. New home building permits in Southern Nevada fell in October to 864, the lowest monthly total since January 1993. Photo by Craig L. Moran. Click image for enlargement. Graphic by Mike Johnson.

The Southern Nevada Index of Leading Economic Indicators dropped to 132.02 in November, mostly due to declining numbers in construction and gaming categories, a local economist said.

Overall, the index has shown a modest decline through 2006, coming down a full point from 133.02 in January. The index was established in 1980 with a baseline of 100.

"There's been no sharp, clear drop that would signal a recession," said Keith Schwer, director of the Center for Business and Economic Research, which compiles the index. "The index suggests a generally flat trend line through March."

The index is a six-month forecast from the month of the data, based on a net-weighted average of 10 series of indicators after adjustments for seasonal variation.

The accompanying chart includes several of the index's categories, along with data such as new residents and employment and housing numbers, updated for the most recent month for which figures are available.

Seven of the index's 10 series of data were lower in November, led by a 75 percent decline in commercial building permit valuation from a year ago and 63 percent decline in residential building permits. Residential permit valuation was down 37 percent.

Residential permitting for September, the month of data used for the index, dropped to 1,469, a clear indicator of the correction needed in the residential housing market, Schwer said. New home building permits fell further in October to 864, the lowest monthly total since January 1993, Home Builders Research reported.

The speed of correction should help in "rebalancing" the residential component of the construction sector that is under way, he said.

"Remember with permits and the value of permits, the lag and the amounts are what's at issue. That's why I'm hesitant to say it's really trending down because there's so much ongoing (construction) right now. That indicator would need to drop more before we have a clear signal," Schwer said.

Construction spending nationwide lost momentum in October. The Census Bureau reported construction value put in place in October was $1.178 trillion at a seasonally adjusted annual rate, down 1 percent from the revised September total.

Nonresidential spending has been flat for the past two months after more than a year of strong growth, Associated General Contractors of America chief economist Ken Simonson noted. Residential construction spending decreased again in October by 1.9 percent, bringing the cumulative decline to 10 percent since peaking last March.

"Going forward, I think there is still plenty of life left in hotel, hospital, energy-related and public (project) spending," Simonson said. "But single-family home construction will remain in a free-fall for several more months."

Rich Gustafson, president of San Diego-based CityMark Development, said the unpredictability of construction costs is creating havoc for some developers in Las Vegas. CityMark was able to stay on budget with its $170 million Juhl mixed-use condo project in downtown Las Vegas by locking in construction material prices two years ago, he said.

Other condo projects, such as Club Renaissance, Sandhurst, Cielo Vista, HUE Lofts and Gateway Las Vegas, have been delayed by construction costs, financing and sales issues. Construction has been halted on Spanish View Tower in the southwest valley.

"A lot of developments are going belly-up," said Gena Lofton, chief executive officer of Los Angeles-based consulting firm Value Added Exchange.