Slight Uptick in Markets Returning to ‘Normal’
In the third quarter, nearly 17 percent – or 59 of 350 metros -- returned to or exceeded their last normal levels of economic and housing activity, according to the National Association of Home Builders/First American Leading Markets Index. That represents a year-over-year gain of seven markets on the index.
“The markets are recovering at a slow, gradual pace,” says NAHB Chairman Kevin Kelly. “Continued job creation, economic growth, and increasing consumer confidence should help spur pent-up demand for housing.”
The index identifies markets that are approaching or exceeding their previous normal levels of economic and housing activity by taking into account more than 350 metros’ average permit, home prices, and employment levels for the past 12 months and comparing it to the last normal period (which is considered from 2000-2003 for single-family permits and home prices, and 2007 for employment).
The top major market on the LMI continues to be Baton Rouge, La., which is performing at 39 percent better than its last normal market level. Additional major metro leaders that had LMI scores equal to or exceeding their previous norms are Austin, Texas; Honolulu; Oklahoma City; Houston; Los Angeles; San Jose, Calif.; Salt Lake City; New Orleans; and Charleston, S.C.
Smaller metros leading the way include Midland and Odessa, Texas -- both markets are now at double their strength prior to the recession. Other small metro leaders include Grand Forks, N.D.; Bismarck, N.D.; and Casper, Wyo.
"Nearly half of all the markets on the Leading Markets Index are up since August, which is a good sign that the ongoing housing recovery will keep moving forward in 2015," says Kurt Pfotenhauer, vice chairman of First American Title Insurance Company.
However, a full-fledged housing recovery rests on builders ramping up homebuilding activity. Single-family permits are still only at 44 percent of normal activity nationwide, says David Crowe, NAHB’s chief economist.