NAHB Leading Markets Data Bodes Well for 2014

Metropolitan areas considered leadingrnmarkets on the National Association of Home Builders (NAHB)/First American indexrnof that name increased to 59 this month, a net gain of one from the previousrnmonth.  The 59 areas have returned to orrnexceeded their last “normal levels” of economic activity as measured by employmentrnlevels, housing permits issued, and home prices.</p

The Leading Market Index (LMI) had arnnationwide score of 87, unchanged from February.  This means that based on current permits,rnprices and employment data, the nationwide average is running at 87 percent ofrnnormal economic and housing activity. rnThirty-two percent of the 350 metro areas tracked by the index hadrnhigher scores this month than last and 84 percent have shown improvement overrnthe past year.<br /<br /"Despite the cold weather that has constrained economic and housingrnactivity across much of the nation this winter, markets are returning to normalrnlevels,” said NAHB Chairman Kevin Kelly.  “As the job and housing markets continuernto mend and the onset of spring releases the pent-up demand for new homes, thisrnwill bode well for the remainder of 2014.”<br /<br /A number of markets are poised to break through on the index according to KurtrnPfotenhauer, vice chairman of First American Title Insurance Company, co-sponsorrnof the report.  Pfotenhauer said that 130rnof the cities tracked are now at 90 percent or above of their previousrnnorms.  This is "a positive trend tornwatch as the year progresses," he said. <br /<br /Baton Rouge is the top major metro on the list with a score of 1.41 – or 41rnpercent better than its last normal market level. Other major metros whose LMIrnscores indicate their market activity now exceeds previous norms are Honolulu,rnOklahoma City, Austin and Houston, Harrisburg and Pittsburgh.  Top smaller markets include Odessa andrnMidland, Texas, both of which have an index of 2.0, meaning they are at twicerntheir previous economic highpoint.  Casper,rnWyoming; Bismarck and Grand Forks, North Dakota round out the top five.  </p

“The strong energy sector is at thernforefront of the recovery and centered in many small and mid-sized markets inrnTexas, Louisiana, North Dakota and Wyoming,” said NAHB Chief EconomistrnDavid Crowe. “In fact, these four states account for eight of the top 10rnmarkets on the LMI and 45 percent of the markets that are at or above normal.”</p

The metropolitan areas are scored by takingrntheir average permit, price and employment levels for the past 12 months andrndividing each by their annual average over the last period of normal growth.  The period of 2000-2003 is used forrnsingle-family permits and home prices and 2007 is the base comparison for employment.rn The three components are then averagedrnto provide an overall score for each market; a national score is calculatedrnbased on national measures of the three metrics. Any value above one indicatesrnthat a market has advanced beyond its previous normal level of economic activity.  Calculations are based on Census Bureau constructionrndata, Bureau of Economic Statistics employment figures, and home prices fromrnFreddie Mac.

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