Homebuilders' Leading Market Index Paints Recovery as Slow, Steady

The country has now reached about 88rnpercent of what is considered its normal level of economic and housing activityrnthe National Association of Home Builders (NAHB) said on Tuesday.  The NAHB/First American Title Insurance LeadingrnMarkets Index (LMI) rose to .88 in April from .87 in March.  In April 2013 the LMI was at .82.</p

49 of the 351 metro marketsrntracked by the index have reached or exceeded 100 on the index indicating thatrnthey have returned to at least their last normal levels of economic and housingrnactivity. Three hundred of the metro areas have improved their index numbers sincernlast April.  </p

“We have always said this recoveryrnwould be a slow but steady one, and I think this index continues to provernthis,” said NAHB Chief Economist David Crowe. “The year started a bitrnslower than anyone could have anticipated but we still expect housing to play arngreater role in aiding the overall economic recovery this year. The job marketrncontinues to mend and that should spur a steady release of pent up demand amongrnhome buyers.”</p

The LMI identifies where markets are relativernto their previous normal levels of activity. rnNAHB takes each area’s average employment, housing permits, and homernprice levels for the past 12 months and divides each by its annual averagernduring the last period of normal growth. rnFor single-family permits and home prices that would be 2000-2003 andrnfor employment the year 2007 is used. rnThe three components are then averaged to provide an overall score forrneach market.  U.S. Census Bureau providesrnthe information on housing permits, employment data comes from the Bureau ofrnLabor Statistics, and Freddie Mac is the source of home price information.  </p

Cities at the forefront of the energyrnboom continue to lead the LMI.  BatonrnRouge remained the top performer among major metros with a LMI of 1.41 – or 41rnpercent better than its last normal market level and the best performing smallrncities were Odessa and Midland, Texas with scores of 2.0 or better, doublerntheir strength prior to the recession.  Other major metros with scores above 100 includernHonolulu, Oklahoma City, Austin and Houston, Los Angeles, San Jose, Calif. andrnHarrisburg while other top small metros are Bismarck, North Dakota; Casper, Wyoming,rnand Grand Forks, North Dakota, all three beneficiaries of the energy boom.</p

“Our builder members tell us theyrnare starting to see more optimism in the field,” said NAHB Chairman KevinrnKelly. “Mortgage rates are low, home prices are affordable and with thernharsh winter behind us our latest surveys show builders are feeling morernbullish about future sales conditions.”

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