Of about 350 metro markets across the United States, 59 returned to or exceeded their last normal levels of economic and housing activity, according to the National Association of Home Builders (NAHB)/First American Leading Markets Index (LMI). This represents a net gain of 11 metros year over year, according to a press release.
The index’s nationwide score ticked up to 0.88 from a March reading of 0.87. This means that based on current permit, price and employment data, the nationwide average is running at 88 percent of normal economic and housing activity. Meanwhile, 28 percent of metro areas saw their score rise in April, and 83 percent have shown an improvement over the past year.
“I think the big news here is that regions outside of the energy states continue to gain ground,” says David Crowe, NAHB chief economist, in a press release. “It’s a promising sign to see areas like Los Angeles and San Jose joining the top 10 largest MSAs showing a recovery. We still expect 2014 to be a strong year for housing and to aid in the overall economic recovery. The job market continues to mend and with that we will see a steady release of pent-up demand of buyers.”
Baton Rouge, La., continues to top the list of major metros on the LMI, with a score of 1.42 – or 42 percent better than its last normal market level. Other major metros at the top of the list are Honolulu, Oklahoma City, Houston and Austin, Texas, as well as San Jose, Calif. and Harrisburg, Pa. – all of whose LMI scores indicate their market activity now exceeds previous norms.
“Things are getting slowly better overall,” says Kevin Kelly, NAHB chairman, a home builder and developer from Wilmington, Del. “And with the housing market now entering the spring buying season, the fact that the nation’s economy is headed in the right direction is a very promising sign.”
Adds Kurt Pfotenhauer, vice chairman of First American Title Insurance Co., which co-sponsors the LMI report: “Stronger employment numbers seemed to be the driving force this month – an important factor to the recovery of our economy.”
Smaller metros showing recovery continue to be dominated by the middle of the country experiencing an energy boom. Odessa and Midland, Texas, boast LMI scores of 2.0 or better. Their markets are now at double their strength prior to the recession. Also at the top of the list of smaller metros are Bismarck, N.D., Casper, Wyo., and Grand Forks, N.D., respectively.
According to NAHB, the LMI shifts the focus from identifying markets that have recently begun to recover, which was the aim of a previous gauge known as the Improving Markets Index, to identifying those areas that are now approaching and exceeding their previous normal levels of economic and housing activity. More than 350 metro areas are scored by taking their average permit, price and employment levels for the past 12 months and dividing each by their annual average over the last period of normal growth.