On March 6th, the National Association of Home Builders (NAHB) released its Leading Market Index (LMI). The report indicates that out of 350 metro areas evaluated across the country, 59 housing markets have returned to or have exceeded their last normal level of economic and housing activity before the recession.
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 construction permits, home prices and employment levels for the past 12 months and then compares that to the market’s historical levels.
Overall, markets nationwide are running at about 87 percent of pre-recession economic and housing activity. Thirty-two percent of the 350 metro areas tracked by the index had higher scores this month than last, and 84 percent have shown improvement over the past year.
Metro areas that are seeing the greatest increase in home prices are those that have experienced positive job and wage growth.
“The strong energy sector is at the forefront of the recovery and centered in many small and mid-sized markets in Texas, Louisiana, North Dakota and Wyoming,” said NAHB Chief Economist David Crowe. “In fact, these four states account for eight of the top 10 markets on the LMI and 45 percent of the markets that are at or above normal.”
Topping the list of major metros on the LMI is Baton Rouge, La., with a score of 1.41 – or 41 percent better than its last “normal” market level. Other major metros at the top of the list include Honolulu, Oklahoma City, Austin and Houston, as well as Harrisburg, Pa. and Pittsburgh – all of whose LMI scores indicate that their market activity now exceeds previous norms.
Top smaller markets include 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: Casper, Wyoming; Bismarck, North Dakota; and Grand Forks, North Dakota, respectively.