As metros nationwide continue to report growth across various metrics, the national housing market is now running 86% back to normal, according to the National Association of Home Builders.
Tracking current building permits, home prices and employment data, NAHB’s Leading Markets Index (LMI) score of 0.86 indicates that the national housing markets 86% of the way back to normal economic and housing activity.
“This index shows that most housing markets across the nation are continuing a slow, gradual climb back to normal levels,” said NAHB Chairman Rick Judson, a home builder from Charlotte, North Carolina. “Policymakers must guard against actions that could impede or even reverse the modest gains of the past year.”
Of the 350 metro areas surveyed by the LMI, NAHB found 54 markets had either returned to or exceeded their last normal levels of economic and housing activity.
Smaller markets were leading the way, particularly where energy is the primary economic driver, said NAHB Chief Economist David Crowe. Nearly half of the top 54 markets are in energy states like Texas, Louisiana, North Dakota, Wyoming and Montana.
“The fact that more than 125 markets on this month’s LMI are showing activity levels of at least 90 percent of previous norms bodes well for a continuing housing recovery in 2014,” said Kurt Pfotenhauer, vice chairman of First American Title Insurance Co., which co-sponsors the LMI report.
Baton Rouge, Louisiana, topped 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 included Honolulu, Oklahoma City, Austin and Houston, Texas, as well as Pittsburgh.
Smaller metros like Odessa and Midland (Texas), boasted LMI scores of 2.0 or better, indicating their markets are now at double their strength prior to the recession.
In September, NAHB replaced its Improving Markets Index, which identified markets that have begun to recover, with the LMI report that identifies areas that are now approaching and exceeding their previous normal levels of economic and housing activity.
In calculating the LMI, NAHB utilizes employment data from the Bureau of Labor Statistics, home price appreciation data from Freddie Mac and single-family housing permits from the U.S. Census Bureau.
Written by Jason Oliva