The National Association of Home Builders (NAHB) said today
that nationwide metropolitan area markets are improving at a constant pace and are
nearing normal economic and housing activity.
The Association’s Leading Market Index (LMI) issued in conjunction with
First American Title Company rose slightly to .90 in the fourth quarter of
The index is based on current data on building permits, home
prices, and employment in each of 350 metropolitan areas nationwide. The national figure indicates that 4th
quarter activity was at 90 percent of normal levels.
Sixty-three of the markets returned to or exceeded their
last normal levels of activity during the quarter, 11 more than in the fourth
quarter of 2013. Sixty-nine percent of
the markets have shown improvement year-over-year.
“The encouraging news is employment, where the number of metros that reached
or surpassed their norms rose by 23 in a year,” said NAHB Chief Economist David
Crowe. “However, single-family permits are only at 44 percent of normal
activity, and remain the sluggish component of the index.”
The LMI scores the metropolitan areas 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 index uses employment data
from the Bureau of Labor Statistics, house price appreciation data from Freddie
Mac and single-family housing permits from the U.S. Census Bureau.
For single-family permits and home prices, 2000-2003 is used as the last
normal period, 2007is 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. An index value above one indicates
that a market has advanced beyond its previous normal level of economic
Baton Rouge continues to top the list of major metros with a score of 1.41 or
41 percent better than its last normal market level. Other major metros leading
the list include Austin, Honolulu, Houston; and Oklahoma City.
Among smaller metros, both Midland and Odessa, Texas, have LMI scores of 2.0
or better, meaning their markets are now at double their strength prior to the
recession. Also leading the list of smaller metros are Grand Forks and Bismarck,
North Dakota; and Casper, Wyoming.
Kurt Pfotenhauer, vice chairman of First American Title said, “More than 80
percent of all metros saw their Leading Markets Index increase or hold steady
over the quarter, a strong indicator that the overall housing market is making
NAHB Chairman Tom Wood said that, “A growing economy and
rising consumer confidence should help drive the release of pent-up demand in