The National Association of Home Builders (NAHB) recently released its Leading Market Index (LMI) on November 6th. The report revealed that out of 350 metros evaluated across the country, 59 housing markets have returned to or have exceeded their last normal level of economic and housing activity seen before the recession. This represents a net gain of 7 metro areas year over year.
The LMI evaluates and identifies those metro areas that are now approaching and exceeding their previous normal levels of economic activity. The index factors in average single-family permits, home prices and employment levels for the past 12 months, and then compares that to the market’s historical levels.
“An uptick in the number of single-family permits, which is currently only 44 percent of normal activity, is the key to a full-fledged housing recovery,” said NAHB Chief Economist David Crowe. “In the 17 metros where permits are at or above normal, the overall index shows that these markets have fully recovered.”
Overall, markets nationwide are running at about 90 percent of normal economic and housing activity. Sixty-six percent of the 350 metro areas tracked by the index have shown improvement over the past year.
“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,” said Kurt Pfotenhauer, vice chairman of First American Title Insurance Company, which co-sponsors the LMI report.
Topping the list of major metros on the LMI is Baton Rouge, Louisiana, with a score of 1.39 – or 39 percent better than its last normal market level. Other major metros at the top of the list include Austin, Texas; Honolulu, Hawaii; Oklahoma City, Oklahoma; and Houston, Texas. Rounding out the top 10 are Los Angeles, California; San Jose, California; Salt Lake City, Utah; New Orleans, Louisiana; and Charleston, South Carolina – all of whose LMI scores indicate that their market activity now equals or exceeds previous norms.
Top smaller markets included Odessa, Texas and Midland, Texas, both of which have seen economic and housing activity double when compared to activity prior to the recession. Rounding out the top five are: Grand Forks, North Dakota; Bismarck, North Dakota; and Casper, Wyoming, respectively.