The National Association of Home
Builders’ (NAHB)/First American Leading Market Index (LMI) was unchanged from
March to April, remaining at 59 metropolitan areas. A position on the index indicates that those
markets returned to or exceeded their last normal levels of economic activity
along three parameters, employment, home prices, and construction activity.
The LMI has gained eleven metropolitan
areas over the last year. There are 350
markets tracked by the index and 28 percent saw their score go up this year and
83 percent have shown improvement in the last 12 months.
The nationwide score for the index in
April is .88, up from .87 in March. This
means that the country as a whole is running at 88 percent of normal economic
and housing activity.
NAHB and First American Title base the
index on housing permit data from the Census Bureau, home price information
from Freddie Mac, and employment figures from the Bureau of Labor
Statistics. Each area is 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. For example, 2000-2003 is used
for single-family house permits and home prices and 2007 is the base for
employment data. The three components
are then averaged to provide an overall score for each market as well as a
national level. An index of 1 would
indicate that that market has advanced to equal its previous normal level of
Baton Rouge continues to top the major
metros with a score of 1.42. Other areas
where activity now exceeds previous norms include Honolulu, Oklahoma City,
Austin, Houston, San Jose, and Harrisburg.
Smaller metros ranking high continue to be those dominated by an energy
boom. Topping the list are Midland and
Odessa Texas, both over 2.0 or more than double normal activity; Bismarck.
North Dakota, Casper Wyoming, and Grand Forks, North Dakota.
“I think the big news here is that
regions outside of the energy states continue to gain ground,” said NAHB
Chief Economist David Crowe. “It’s a promising sign to see areas like Los
Angeles and San Jose joining the top ten largest MSAs showing a recovery. We
still expect 2014 to be a strong year for housing and to aid in the overall
economic recovery. The job market continues to mend and with that we will see a
steady release of pent up demand of buyers.”