WASHINGTON – Dec. 5, 2013 – Markets in 54 out of approximately 350 metro areas nationwide returned to, or exceeded, their last normal levels of economic and housing activity, according to the National Association of Home Builders (NAHB)/First American Leading Markets Index (LMI), released today. Smaller metros accounted for most of the markets operating at or above normal levels, with almost half of them located in states with energy industries.
The index’s nationwide score of .86 indicates that, based on current permits, prices and employment data, the nationwide market is running at 86 percent of its normal economic and housing activity.
In a look at just housing markets, the LMI for November found that 55 were operating at or above their last normal levels, and the nationwide market was operating at 85 percent of normal growth.
“The fact that more than 125 markets on this month’s LMI are showing activity levels of at least 90 percent of previous norms bodes well for a continuing housing recovery in 2014,” says Kurt Pfotenhauer, vice chairman of First American Title Insurance Co., which co-sponsors the LMI report.
Baton Rouge, La., tops the list of major metros on the LMI, with a score of 1.42 - or 42 percent better than its last normal market level. Other major metros at the top of the list include Honolulu, Oklahoma City, Austin and Houston, Texas, as well as Pittsburgh.
The LMI is a new index for NAHB. It replaces the Improving Markets Index.
To calculate the index, more than 350 metro areas are scored based on their average permit, price and employment levels for the past 12 months, divided by their annual average over the last period of normal growth.
For single-family permits and home prices, 2000-2003 is used as the last normal period. For employment, 2007 is the base comparison. The three components are then averaged to provide an overall score for each market. A national score is calculated based on national measures of the three metrics.
An index value above one indicates that a market has advanced beyond its previous normal level of economic activity.
© 2013 Florida Realtors®