Housing Showing ‘Promising Signs’ For Spring Buying Season

Posted by Patrick Barnard on April 07, 2014 No Comments
Categories : Residential Mortgage

The majority of the nation is now running at normal levels of economic and housing activity, with 83% of metro areas showing an improvement over the past year, according to the National Association of Home Builders (NAHB)/First American Leading Markets Index (LMI).

The index's nationwide score ticked up to .88 from a March reading of .87 – meaning that based on current permit, price and employment data, the nationwide average is running at 88% of normal economic and housing activity. Meanwhile, 28% of metro areas saw their score rise over the month, and 83% have shown an improvement over the past year.

Kurt Pfotenhauer, vice chairman of First American Title Insurance Co., which co-sponsors the LMI report, believes that "stronger employment numbers seemed to be the driving force" for this month's improvements.

Baton Rouge, La., continues to top the list of major metros on the LMI, with a score of 1.42 – or 42% better than its last normal market level. Other major metros at the top of the list include Honolulu; Oklahoma City; Austin, Texas; Houston; San Jose, Calif.; and Harrisburg, Pa. – all of whose LMI scores indicate that their market activity now exceeds previous norms, reports NAHB.

"I think the big news here is that regions outside of the energy states continue to gain ground," comments David Crowe, chief economist for the association. "It's a promising sign to see areas like Los Angeles and San Jose joining the top 10 largest metropolitan statistical areas showing a recovery."

"Things are getting slowly better overall," says Kevin Kelly, chairman of NAHB and a home builder and developer from Wilmington, Del. "And with the housing market now entering the spring buying season, the fact that the nation's economy is headed in the right direction is a very promising sign."

Crowe adds that this projected "strong year for housing" will, in turn, help with the nation's improving economy. He says that as "the job market continues to mend," there will be a "steady release of pent-up demand of buyers."

NAHB notes that smaller metros showing recovery continue to be dominated by the middle of the country experiencing an energy boom. Odessa and Midland, Texas, boast LMI scores of 2.0 or better, with their markets now at double their strength prior to the recession. Also at the top of the list of smaller metros are Bismarck, N.D.; Casper, Wyo.; and Grand Forks, N.D., respectively.

In calculating its monthly LMI, NAHB uses employment data from the Bureau of Labor Statistics, house price appreciation data from Freddie Mac and single-family housing permits from the U.S. Census Bureau.

For more on NAHB's LMI, click here.

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