The housing market continues to make positive strides on its road to recovery, as now one in six metro areas nationwide have either returned to or exceeded their previous norms and the national market edges 87% back to “normal,” a recent index suggests.
Markets in 58 out of approximately 350 metro areas nationwide have returned to or exceeded their last normal levels of economic and housing activity, according to the National Association of Home Builders/First American Leading Markets Index (LMI).
“Housing markets across the nation are continuing their slow and steady climb back to normal levels,” said NAHB Chairman Rick Judson. “As employment and consumer confidence slowly improves, this is spurring pent-up demand among potential buyers.”
The LMI determines a market’s progress by calculating average permit, prices and employment levels in these areas for the past 12 months. Then it divides each category by their annual average over the last period of normal growth.
In the past month, the index experienced a gain of 0.87, meaning the based on current permits, prices and employment data, the nationwide average is running at 87% of normal economic and housing activity.
“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.
Some of the healthiest markets are centered in smaller metros that boast strong local economies, particularly those in the oil and gas producing states, Crowe said.
These states include Texas, North Dakota, Wyoming and Louisiana—which played home to the top metro, Baton Rouge, where housing and economic activity is 41% better than the city’s last normal market level.
Smaller metros such as Texas’ Odessa and Midland, posted scores of 2.0 or better, signaling their markets are now at double their strength prior to the recession, NAHB notes.
“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.
Written by Jason Oliva