Metropolitan areas considered leading
markets on the National Association of Home Builders (NAHB)/First American index
of that name increased to 59 this month, a net gain of one from the previous
month. The 59 areas have returned to or
exceeded their last "normal levels" of economic activity as measured by employment
levels, housing permits issued, and home prices.
The Leading Market Index (LMI) had a
nationwide score of 87, unchanged from February. This means that based on current permits,
prices and employment data, the nationwide average is running at 87 percent of
normal 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.
"Despite the cold weather that has constrained economic and housing
activity across much of the nation this winter, markets are returning to normal
levels," said NAHB Chairman Kevin Kelly. "As the job and housing markets continue
to mend and the onset of spring releases the pent-up demand for new homes, this
will bode well for the remainder of 2014."
A number of markets are poised to break through on the index according to Kurt
Pfotenhauer, vice chairman of First American Title Insurance Company, co-sponsor
of the report. Pfotenhauer said that 130
of the cities tracked are now at 90 percent or above of their previous
norms. This is "a positive trend to
watch as the year progresses," he said.
Baton Rouge is the top major metro on the list with a score of 1.41 - or 41
percent better than its last normal market level. Other major metros whose LMI
scores indicate their market activity now exceeds previous norms are Honolulu,
Oklahoma City, Austin and Houston, Harrisburg and Pittsburgh. Top smaller markets include Odessa and
Midland, Texas, both of which have an index of 2.0, meaning they are at twice
their previous economic highpoint. Casper,
Wyoming; Bismarck and Grand Forks, North Dakota round out the top five.
"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."
The metropolitan 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. The period of 2000-2003 is used for
single-family permits and home prices and 2007 is the base comparison for employment.
The three components are then averaged
to provide an overall score for each market; a national score is calculated
based on national measures of the three metrics. Any value above one indicates
that a market has advanced beyond its previous normal level of economic activity. Calculations are based on Census Bureau construction
data, Bureau of Economic Statistics employment figures, and home prices from