A new index from First American and the National Association of Home Builders (NAHB) suggests that about one in seven housing markets have returned to or surpassed their pre-recessionary levels of activity.
The new Leading Market Index (LMI), released for the first time this week, measures employment growth data from the Bureau of Labor Statistics, home price appreciation data from Freddie Mac, and single-family housing permit growth from the Census Bureau to measure overall improvements in each market.
While the LMI helps illustrate how far the recovery has come in the last several years, NAHB chairman Rick Judson said it also measures “how much further it has to go as we continue to face some significant headwinds in terms of credit availability, rising costs for lots and labor, and uncertainties regarding Washington policymaking.”
According to the association, the index registered a score of 0.85 nationwide, indicating that the national housing market is running at 85 percent of normal activity.
Of the nearly 350 metro markets examined, 52 have reported levels of activity at least equal to those before the recession hit. What’s more, housing markets in 118 metros scored 0.9 or higher, which Kurt Pfotenhauer, vice chairman of First American Title Insurance Co., described as “a very encouraging sign of things to come.”
Baton Rouge, Louisiana, ranked highest on the list of improved major markets, posting an index score of 1.41-41 percent better than its last normal market level. Other major metros reporting growth include Honolulu, Hawaii; Oklahoma City, Oklahoma; Harrisburg, Pennsylvania; and Austin and Houston, Texas.
Widening the scope to include smaller metros, both Odessa and Midland, Texas, scored 2.0 or better, meaning their markets have doubled in strength compared to pre-recession years. Also topping the list of smaller metros are Casper, Wyoming; Bismarck, North Dakota; and Florence, Alabama.
“Smaller metros are leading the way to a housing recovery, accounting for 43 of the top 50 markets on the current LMI,” said NAHB chief economist David Crowe. “This is very much in keeping with the results of our previous index for improving markets, and is an indication of the extent to which local economic conditions dictate the strength of individual housing markets.”