Energy Boom Areas Continue as Leading Markets

The National Association of Home Builders/First American Title Leading Market Index (LMI) had a year-over-year net gain of seven metropolitan areas in the third quarter of 2014.   The Index counted 59 improving markets out of a total of 350 metropolitan areas nationwide, compared to 52 one year earlier.

The index is based on current rates of housing permits issued, home prices, and employment data compared to the last levels of economic and housing activity considered to represent a normal market.  Markets considered leading either exceeded or continued to exceed those norms.

The nationwide score on the index moved from 89 in the second quarter to 90 in the third meaning that the national average is running at 90 percent of normal economic and housing activity. Sixty-six percent of individual markets have shown year-over-year improvement.

"The markets are recovering at a slow, gradual pace," said NAHB Chairman Kevin Kelly. "Continued job creation, economic growth and increasing consumer confidence should help spur pent-up demand for housing."

Baton Rouge continues to top the list of major metros with an LMI score of 1.39 - or 39 percent better than its last normal market level. Other major metros with LMI scores indicating their market activity now equals or exceeds previous norms include, in order Austin, Honolulu; Oklahoma City and Houston.   The top ten market also includes Los Angeles; San Jose, Salt Lake City; New Orleans and Charleston. 

Midland and Odessa, Texas were tops among smaller metropolitan areas.  Each had a score exceeding 2.0 meaning their markets are now at double their strength prior to the recession.  Also near the top among smaller metros were Grand Forks and Bismarck, North Dakota and Casper Wyoming.  

"An uptick in the number of single-family permits, which is currently only 44 percent of normal activity, is the key to a full-fledged housing recovery," said NAHB Chief Economist David Crowe. "In the 17 metros where permits are at or above normal, the overall index shows that these markets have fully recovered."