Improving Markets List Hits New High, but There's a Catch

The list of improving housing markets maintained by the National Association of Home Builders (NAHB) and First American Title Insurance Company appears to have broken out of its recent doldrums, surging by a net total of 44 metro areas in September after declining for five out of the last six months.  Some of the gains however may be the result of changes in one method of compiling data.

A total of 291 metropolitan areas across the country now qualify as improving housing markets, the highest point for the Improving Markets Index (IMI) since it was initiated two years ago.  Forty-nine markets were added to the list, 242 retained their positions from August, and five were dropped.

The IMI identifies metropolitan areas that have shown improvement from their respective troughs in housing permits, employment and house prices for at least six consecutive months.  NAHB uses construction data from the U.S. Census Bureau, home price data from Freddie Mac, and employment information from the Bureau of Labor Statistics in compiling the list.

"Just over 80 percent of the 361 metros tracked by our index are showing consistent growth in three key measures of housing market strength - prices, permits and employment," explained NAHB Chairman Rick Judson.  "While there is still plenty of room for growth, this is an excellent indication of how the housing recovery has begun to take hold across more geographic areas."

"The dramatic increase in markets qualifying for the IMI in September was partly due to a recent improvement in the way that Freddie Mac measures home prices, which resulted in stronger gains than previously reported," noted NAHB Chief Economist David Crowe. "Even so, the broadened list of metros on the IMI continues to demonstrate the slow but steady gains that individual housing markets are making to bolster the national outlook."

"With every state now able to claim at least one county that's part of an improving metro, and 23 states having charted at least one new entry in September alone, prospective home buyers have good reason to be encouraged by this news," said Kurt Pfotenhauer, vice chairman of First American.

Recent additions to the list were such geographically diverse locations as Macon, St. Cloud, Brownsville, Spokane, and Milwaukee.  Of the five cities that fell from the list three were in North Carolina - Jacksonville, Winston, and Burlington.  Also dropped were Kankakee, Illinois and Danville, Virginia.