Seasonal Trends Blamed For Decline in NAHB's Improving Markets List

The list of improving markets compiled by the National Association of Homebuilders (NAHB) and First American Title appears to have hit an inevitable point of diminishing returns.  The index lost a net of 15 markets in May, declining to 258 as 19 markets fell off the list while only four were added.  Despite the slide, the NAHB notes that markets followed similar pattern last year.

To be included on the list a market must have sustained improvement from their respective low points in each of three metrics, employment, housing permits, and home prices, for six months.  Losing ground in any one component will drop the market temporarily from the list.  Improvement on the metrics is measured by data provided respectively by the Bureau of Labor Statistics, the Census Bureau, and Freddie Mac. 

New to the list this month are Dothan, Alabama; Elizabethtown, Kentucky; Salisbury, Maryland; and Salem, Oregon. Several major cities were among the names dropped from the list including Chicago, Raleigh, Philadelphia, Albuquerque, and Lexington, Kentucky and three of the nineteen cities were in Wisconsin. 

"While seasonal trends in home prices resulted in an overall decline in the IMI this month, the index remains at a very strong level and continues to represent markets in every state," noted NAHB Chief Economist David Crowe. "Some metropolitan areas that had previously charted marginal home-price gains dropped off the list this time as a result of typically softer prices seen in the winter months, which is similar to what the index showed in this same period last year."