Index Shows Housing Markets Back To Normal In 52 Metros

Posted by Patrick Barnard on October 07, 2013 No Comments
Categories : Residential Mortgage

Housing markets in 52 out of approximately 350 metro areas nationwide have now returned to or exceeded their pre-recession levels of activity, according to the new National Association of Home Builders (NAHB)/First American Leading Markets Index (LMI).

The index's nationwide score of .85 – based on current permits, prices and employment data – indicates the nationwide housing market is running at 85% of normal activity. Rick Judson, chairman of the NAHB, comments that the index shows not only how far the U.S. housing recovery has come, but also how much further it still needs to go.

Baton Rouge, La., tops the list of major metros on the LMI, with a score of 1.41 – or 41% better than its last normal market level. Other major metros at the top of the list include Honolulu; Oklahoma City; Austin, Texas; Houston; and Harrisburg, Pa. – all of whose LMI scores indicate that their housing markets now exceed previous norms.

Smaller metros of Odessa and Midland, Texas, boast LMI scores of 2.0 or better, meaning that their housing markets are now at double their strength prior to the recession, according to the report. Also at the top of the list of smaller metros are Casper, Wyo.; Bismarck, N.D.; and Florence, Ala, respectively.

"Smaller metros are leading the way to a housing recovery, accounting for 43 of the top 50 markets on the current LMI," says David Crowe, chief economist for NAHB. He believes this is "an indication of the extent to which local economic conditions dictate the strength of individual housing markets."

The NAHB says the new report shifts the focus from identifying markets that have recently begun to recover – which was the aim of a previous gauge known as the Improving Markets Index – to identifying those areas that are now approaching and exceeding their previous normal levels of activity.

"The housing markets of 118 metros scored by the LMI this month show activity levels of at least 90 percent of their previous norms – a very encouraging sign of things to come," says Kurt Pfotenhauer, vice chairman of First American Title Insurance Co., which co-sponsors the LMI report.

The report notes the metro areas are scored by taking their average permit, price and employment numbers for the past 12 months and dividing each by their annual average over the last period of normal growth.

To view more of the report, click here.

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