Improving Markets Index Beginning to Plateau

The National Association of Home Builders/First American Improving Markets Index (IMI) grew by two metropolitan areas (MAs) in April.  Thirteen new MAs were added to the list while 11 fell off of the March tally, bringing the current total to 101 metropolitan areas.  Thirty-five states (including the District of Columbia) are now represented by at least one market on the list and 10 states have four or more cities represented.

Markets are deemed to be improving when they show growth from their respective troughs in the number of housing permits issued, employment, and house prices according to data from the Census Bureau, the Bureau of Labor Statistics, and Freddie Mac.  An area must show an improvement in all three areas for six consecutive months for inclusion on the list.

Among the new entrants, areas as diverse as Rome, Ga.; Coeur d'Alene, Idaho; Greenville, N.C.; Brownsville, Texas; St. George, Utah; and Huntington, W.Va., are now represented on the IMI.

"After five consecutive months of gains, the IMI recently began to plateau, with many markets holding steady and a few experiencing the ups-and-downs that are typical in a choppy recovery," observed NAHB Chief Economist David Crowe. "The IMI is designed to highlight markets that are showing consistent improvement, and those markets that have registered the smallest gains are more susceptible to dropping off the list due to a minor setback in prices, permits or employment," he explained. At the same time, "as stronger markets approach stability, it will get harder for them to keep charting improvement, which will also limit the expansion of the IMI."