“Housing markets across the nation are continuing their slow and steady climb back to normal levels,” National Association of Home Builders (NAHB) Chairman Rick Judson said today.
Judson announced that the NAHB/First American Title Insurance Leading Markets Index hit .87 this month, indicating that the nation is now running at about 87 percent of normal economic and housing activity. In addition, 58 metropolitan areas made the NAHB list of leading markets, meaning they have returned to or exceeded their last normal levels of economic and housing activity.
The Leading Markets Index is based on data from the U.S. Census, Freddie Mac, and the Department of Labor Statistics on permits for housing construction, home prices, and employment. More than 350 metro areas are scored by taking their average number for each of the three types of information over the previous 12 months and dividing each by their annual average over the last period of normal growth; 2000-2003 for single-family permits and home prices, and 2007 for employment. The national score is calculated based on national measures of the three metrics.
NAHB says the index serves to identify those areas that are now approaching and/or exceeding their previous normal levels of economic and housing activity. There are two more metro areas on this month’s list than last and the nationwide score is up from .86 January.
The highest score on the index for major markets was for Baton Rouge at 1.41. This indicates that the area is performing 41 percent above its last normal market level. Other major metros at the top of the list include Honolulu, Oklahoma City, Austin and Houston, as well as Harrisburg and Pittsburgh – all of whose LMI scores indicate that their market activity now exceeds previous norms.
Looking at smaller metros, both Odessa and Midland, Texas, boast LMI scores of 2.0 or better, putting them at more than double their strength prior to the recession. Also at the top of the list of smaller metros are Bismarck, North Dakota; Casper, Wyoming; and Grand Forks, North Dakota, respectively.
“Firming home prices are hastening the return of normal economic and housing activity in an increasing number of markets,” said NAHB Chief Economist David Crowe. “The healthiest markets continue to be centered in smaller metros that boast strong local economies, particularly in the oil and gas producing states of Texas, North Dakota, Louisiana and Wyoming.”
“We are pleased about the continued market trends, highlighted by the fact that eighty-five percent of all metropolitan areas have shown signs of improvement over the past year,” said Kurt Pfotenhauer, vice chairman of First American Title Insurance Co., which co-sponsors the LMI report.
The improving market levels are good news for the housing industry Judson says. “As employment and consumer confidence slowly improves, this is spurring pent-up demand among potential buyers.”