The LMI, which replaces the ImprovingrnMarkets Index used by NAHB during most of the recovery, shifts the focus fromrnidentifying markets that have recently begun to recover to identifying those thatrnare now approaching and exceeding their previous normal levels of economic andrnhousing activity.  Areas are scored byrntaking their average home construction permit, home price and employment levelsrnfor the past 12 months and dividing each by their annual average over the lastrnperiod of normal growth. For single-family permits and home prices, 2000-2003rnis used as the last normal period, and for employment, 2007 is the baserncomparison. The three components are then averaged to provide an overall scorernfor each market; a national score is calculated based on national measures ofrnthe three metrics. An index value above one indicates that a market hasrnadvanced beyond its previous normal level of economic activity.<br /<br /The 56 areas are a net gain of two metro areas from December.  The index’s nationwide score of .86 indicatesrnthat, based on current permits, prices and employment data, the nationwidernaverage is running at 86 percent of normal economic and housing activity.<br /<br /"Forty-five percent of metro areas are recovering at a faster pace thanrnthe nation as a whole, with smaller markets leading the way," said NAHBrnChief Economist David Crowe. "Of the 56 markets that are at or abovernnormal levels, 48 of them have populations that are less than 500,000, and manyrnof these local metros are fueled by a strong energy sector, which is producingrnsolid job and economic growth.”<br /<br /Baton Rouge was at the top of the list of major metros with a score of 1.42,rnindicating it has improved by over 42 percent from its last normal marketrnlevel.  Honolulu, Oklahoma City, Austin, Houston,rnHarrisburg and Pittsburgh all have LMI scores that indicate their marketrnactivity now exceeds previous norms.<br /<br /Among smaller metros, both Odessa and Midland, Texas have scores of 2.0 orrnbetter, that is they are now at double their strength prior to the recession.rnAlso at the top of the list of smaller metros are Casper, Wyoming and Bismarck andrnGrand Forks, North Dakota.</p

“More than 35 percent of all thernmarkets on this month’s LMI are operating at a capacity of 90 percent or betterrnof previous norms, which is a good sign that the housing recovery will continuernto pick up steam in 2014,” said Kurt Pfotenhauer, vice chairman of FirstrnAmerican Title Insurance Company. </p

“More markets are slowly returningrnto normal levels and we expect this upward trend to continue as an improvingrneconomy and pent-up demand brings more home buyers back into thernmarketplace,” said NAHB Chairman Rick Judson.  “Policymakers must be careful to avoidrnactions that would harm consumer confidence and impede the ongoingrnrecovery.”

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