Energy States Continue to Dominate Leading Markets

The National Association of HomernBuilders’ (NAHB)/First American Leading Market Index (LMI) was unchanged fromrnMarch to April, remaining at 59 metropolitan areas.  A position on the index indicates that thosernmarkets returned to or exceeded their last normal levels of economic activityrnalong three parameters, employment, home prices, and construction activity.</p

The LMI has gained eleven metropolitanrnareas over the last year.  There are 350rnmarkets tracked by the index and 28 percent saw their score go up this year andrn83 percent have shown improvement in the last 12 months.</p

The nationwide score for the index inrnApril is .88, up from .87 in March.  Thisrnmeans that the country as a whole is running at 88 percent of normal economicrnand housing activity. </p

NAHB and First American Title base thernindex on housing permit data from the Census Bureau, home price informationrnfrom Freddie Mac, and employment figures from the Bureau of LaborrnStatistics.  Each area is scored byrntaking their average permit, price, and employment levels for the past 12rnmonths and dividing each by their annual average over the last period of normalrngrowth.  For example, 2000-2003 is usedrnfor single-family house permits and home prices and 2007 is the base forrnemployment data.  The three componentsrnare then averaged to provide an overall score for each market as well as arnnational level.  An index of 1 wouldrnindicate that that market has advanced to equal its previous normal level ofrneconomic activity. </p

Baton Rouge continues to top the majorrnmetros with a score of 1.42.  Other areasrnwhere activity now exceeds previous norms include Honolulu, Oklahoma City,rnAustin, Houston, San Jose, and Harrisburg. rnSmaller metros ranking high continue to be those dominated by an energyrnboom.  Topping the list are Midland andrnOdessa Texas, both over 2.0 or more than double normal activity; Bismarck.rnNorth Dakota, Casper Wyoming, and Grand Forks, North Dakota.</p

“I think the big news here is thatrnregions outside of the energy states continue to gain ground,” said NAHBrnChief Economist David Crowe. “It’s a promising sign to see areas like LosrnAngeles and San Jose joining the top ten largest MSAs showing a recovery. Wernstill expect 2014 to be a strong year for housing and to aid in the overallrneconomic recovery. The job market continues to mend and with that we will see arnsteady release of pent up demand of buyers.”

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