Las Vegas construction slows as tourism slump and rising costs bite Nevada

Las Vegas's construction sector faced a sharp downturn in August as a tourism slowdown and higher costs weighed on activity across the city and the state. Nevada shed 7,100 construction jobs in August from a year earlier, a 6.4% drop, according to the Associated General Contractors of America. The decline reflected broad weakness in both homebuilding and commercial work and underscored how closely Nevada's fortunes are tied to the tourism industry.

Statewide, construction employment fell 4,400 jobs between July and August, a 4.1% month-over-month drop that ranked as the worst such decline among US states by both raw numbers and percentage. The U.S. as a whole lost about 7,000 construction jobs in August, and Nevada accounted for nearly two-thirds of the country's loss that month. Ken Simonson, chief economist for the AGC, said the state's construction picture had "gotten much worse" than it was two years ago, when a peak in Las Vegas construction employment was reached. He noted that the loss in construction jobs is a leading indicator of broader employment trends in Nevada as a whole.

Tourism's retreat has been widespread, with visitors citing higher prices for hotels, food, drinks and casinos. Some analysts blame tariffs and a high cost of capital for a slowdown in both domestic and foreign demand. The weakness in Vegas tourism has taken a toll on nearby employers tied to hospitality and entertainment, and the impact has rippled into construction as developers delayed or downsized projects. Harry Reid International Airport reported a 3.9% drop in travelers between May 2024 and May 2025, and occupancy on the Las Vegas Strip fell about 3.2% in the same period, according to the data cited in the AGC briefing. Ken Simonson pointed to the heavy reliance on foreign visitors in Nevada's construction workforce—foreign-born workers make up 48% of the state's construction workforce, behind only California and Texas.

Nevada's construction sector has long accounted for a sizable slice of the state's economy. In 2024, construction activity contributed about $20 billion to Nevada's $260 billion gross domestic product, roughly 7.8% of the total. That share remains among the higher levels in the country, with Utah's construction GDP share a bit higher at 8.5%.

Homebuilding and remodeling in Southern Nevada have cooled. January home sales by builders totaled 974, but sales slipped to 653 in August. The inventory of finished but unsold homes stood at 688 in the first week of September, more than the total sold in August. Foreclosure activity has also risen; lenders filed about 1,290 default notices in the first half of the year, with a little more than 1,000 tied to single-family homes. Patricia Farley, owner of Southwest Specialties, said builders face ongoing costs while inventory sits idle, noting that a $300,000 sunk investment can become a heavy burden when 100 homes remain unsold and carry ongoing interest.

Several market dynamics continue to weigh on the sector. The national trend of higher mortgage rates—more than doubling from sub-3% levels in 2020 to near 7% this year—helps restrain demand for new homes, while inflation, tariffs and global uncertainty add to the cost pressures for developers. The median price of US home sales has remained above $400,000 since early 2022, according to Federal Reserve Bank of St. Louis data, even as the number of buyers has fluctuated. Nevada's reliance on foreign labor, a fact highlighted by AGC data, complicates the ability to quickly adjust to shifts in demand in a tight labor market.

Industry observers say the near-term outlook will depend on whether tourism recovers and whether financing conditions ease, given the combined pressure from prices, rates, and tariffs.