Eleven Cities Fall From Improving Markets List; Annual Trend Stays Strong

The list of 'Improving Markets" compiled by the National Association of Home Builders (NAHB) and First American Title declined by eight in August to 247. This number included 244 metropolitan areas that appeared on the July list and three newcomers. Eleven cities fell from the list.

The Improving Markets Index (IMI) identifies cities which have shown improvement from their respective troughs on three economic markers, home construction, employment, and home prices, for at least six consecutive months. NAHB/First American use housing permit data from the U.S. Census Bureau, employment statistics from the Bureau of Labor Statistics, and home price information from Freddie Mac to construct the IMI.

Added to the list this month were Kankakee, Illinois, and Atlantic City and Ocean City in New Jersey. Dropping from the list were Huntington and Parkersburg, West Virginia; Las Cruces, New Mexico; Tyler, Texas, Lewiston, Idaho; Lancaster, Pennsylvania; Bloomington, Indiana; Champaign, Spartenburg, St. Cloud, and Virginia Beach.

While the number of improving markets is down from July, NAHB pointed out that the list includes about three times the number of metropolitan areas that were on the list just one year ago. However, the list peaked at 274 areas in March and, except for June, has declined each month since. Even with the recent declines approximately 70 percent of U.S. Metro areas remain on the list.

"In all, 244 metros that were listed as improving in July retained that status in August, and this is an encouraging sign of the continuing housing recovery," noted NAHB Chairman Rick Judson. "That said, we know that the pace of improvement is being hampered somewhat by challenges that builders and buyers are experiencing with regard to the availability of credit, materials, lots for development, and labor."

"While the number of improving housing markets this August remains well ahead of the same month last year, the index is affected by seasonal softening in home prices just as we saw happen in 2012.  The metros that fell off the list this month originally qualified with very small home price improvements that have since slipped back," explained NAHB Chief Economist David Crowe. "As house prices return to more normal levels in fully recovered markets, further IMI advancements will be more modest."