According to the National Association of Home Builders, markets in 68 out of approximately 360 metro areas throughout the country returned to or even exceeded their last normal levels of economic and housing activity during the first quarter of this year.
The National Association of Home Builders/First American Leading Markets Index was recently released and shows a year on year net gain in seven markets. The nationwide score for the index increased .91 and this shows that based on current permit, employment and price data, the national average is at 91% of normal economic and housing activity. In the meantime 68% of markets have shown an improvement over the past year. This is due to low interest rates and a strengthening economy and it’s expected that these markets will continue to make gains as pent-up demand is gradually released. As a result the housing market is anticipated to keep moving forward this year.
At the top of the list of major metro areas in the index is Baton Rouge in Louisiana, which has a score of 1.43. This means it is 43% better than its last normal market level. Other major metro areas in the top 10 include Nashville,Tennessee; Charleston, South Carolina; Salt Lake City; Los Angeles; San Jose, California; Oklahoma City; Houston; Honolulu and Austin. According to the chief economist of the National Association of Home Builders, the strongest gain is in employment and is in areas where norms have surpassed or even nearly doubled in just a year. Although there has been a minor increase in single-family permits, just 7% of the markets have reached or are above their normal permit activity.
The number of metro areas in this quarters report that have reached 90% or above previous normal levels now stands at 157, a figure that shows the recovery is reaching a wider range of markets. In smaller metro areas, Midland and Odessa in Texas have scores of 2.0 or more which means these markets are now at double normal levels reached before the recession.
The Leading Markets Index has begun to shift the focus from identify markets that have recently begun to recover to identifying areas that have begun to approach or even exceed previous normal levels of Housing and economic activity. The index looks at more than 350 metro areas which are scored by taking the average price, permit and employment levels over the past 12 months. This figure is then divided by the annual average over the last period of normal growth.
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