While the number of U.S. housing markets showing sustained improvement fell slightly in May, outlook remains strong for continued recovery, according to the National Association of Home Builders (NAHB) First American Improving Markets Index (IMI).
In May, the number of improving markets fell to 258 from 273 recorded in April.
The IMI identifies metropolitan areas that have shown improvement in housing permits, employment and home prices for at least six consecutive months.
While 19 metros were dropped from the list in May, whereas only four were added, experts are optimistic for continued progress.
“The fact that over 70 percent of all U.S. metros are holding onto their spots on the improving list is definitely good news, and representative of the generally brightening outlook for housing markets nationwide,” said NAHB Chairman Rick Judson, a home builder from Charlotte, North Carolina.
Rising challenges related to the availability of credit, building materials, labor and lots for development have been key drivers in slowing the industry’s recovery progress, notes Judson.
The drop-off of metros for May’s IMI reading could be attributed to seasonal trends, specifically during the winter months, according to NAHB Chief Economist David Crowe.
“Some metropolitan areas that had previously charted marginal home-price gains dropped off the list this time as a result of typically softer prices seen in the winter months, which is similar to what the index showed in this same period last year,” said Crowe.
New additions to the index included geographically diverse cities of Dothan, Alabama; Elizabethtown, Kentucky; Salisbury, Maryland; and Salem, Oregon.
The IMI contrives its data on employment growth from the Bureau of Labor Statistics, house price appreciation from Freddie Mac and single-family housing permit growth from the U.S. Census Bureau.
Written by Jason Oliva