According to the National Association of Home Builders/First American Leading Markets Index, markets in 56 out of the 350 metro areas in the country have returned to or already exceeded normal levels of housing and economic activity. The index shows a year on year net gain of seven markets.
Nationwide, the index score increased slightly to .89. This is based on current data for employment and permit price and shows the average is now at 89% of normal housing and economic activity. According to the article in Rismedia, 78% of markets have shown an improvement year on year. Homebuilders expect this gradual improvement to continue, especially as employment levels increase, releasing pent-up demand of home buyers. The list of major metro areas is topped by Baton Rouge Louisiana as it has a score of 1.39 which means the market is 39% improved over its last normal market level. Other top-performing markets include Oklahoma City, Honolulu, and Houston and Austin in Texas. Also in the top 10 are Salt Lake City, San Jose and Los Angeles in California, Des Moines and New Orleans.
Nationally the amount of single-family housing permits is just 43% of normal levels as this is still lagging behind. However employment levels are much better and the number of metro areas where data has now reached or exceeded their normal values grew from 26 to 46 over the past year. There are 22 metro areas where permits are now at or above normal levels, and the overall index shows these markets have now fully recovered.
In terms of smaller markets, Midland and Odessa in Texas both had scores of 2.0 or better. This means their markets are now at levels double to that seen prior to the recession. The markets of Bismarck, ND, Casper, Wyoming, and Grand forks ND are also doing well.
The Leading Markets Index is different from a previous survey called the Improving Markets Index which identified markets that had recently begun to recover. Instead the Leading Markets Index looks at areas that are either approaching normal levels or have already exceeded them in terms of housing activity and economic activity. The index scores more than 350 metro areas, looking at the average permit, employment levels and prices over the past year. Each score is divided with the annual average during the last period of normal growth. For home prices and single-family permits the index uses 2002-2003 as the last normal period, while 2007 is used as the average for employment figures.