More than 35 percent of the more than 350 metro markets tracked in the National Association of Home Builders’ and First American’s Leading Markets Index are performing at 90 percent or higher of their pre-housing crisis norms, according to the latest Leading Markets Index.
Previously, NAHB and First American tracked markets based on their rate of growth in the Improving Markets Index. Instead, the Leading Markets Index compares each market to its pre-crisis norms in terms of current permits, prices, and employment.
Currently, 56 markets have turned the corner and returned to normal, up from 54 last month.
“More markets are slowly returning to normal levels and we expect this upward trend to continue as an improving economy and pent-up demand brings more home buyers back into the marketplace,” said Rick Judson, chairman of the NAHB.
A majority of the markets that are back to normal levels are smaller markets with populations of less than 500,000. Forty-eight of the 56 markets that are back to normal fall into this category, with many benefitting from strong energy sectors, which lead to strong employment.
Overall, metro markets across the nation are performing at an average of 86 percent of normal levels in terms of permits, prices, and employment, according to NAHB. Forty-five percent of metros are exceeding this rate.
Among large metros, Baton Rouge, Louisiana, in performing best, 42 percent better than its pre-crisis level. Oklahoma City, Oklahoma, Austin Texas, and Houston, Texas, are also at the top of the list of major metros.
Among smaller metros, two are performing at twice their pre-crisis level—Odessa, Texas, and Midland, Texas.
As markets continue to work their way back to normal and/or surpass their previous norms, Judson says, “Policymakers must be careful to avoid actions that would harm consumer confidence and impede the ongoing recovery.”