December 6th, 2013
Small but steady gains are occurring in the U.S. housing market as it works toward pre-recession levels.
The Leading Markets Index, a joint report from the National Association of Home Builders and First American Title Insurance Co., revealed that housing markets in 54 of approximately 350 nationwide metro areas have met or surpassed their pre-recession activity levels. The nation had a score of 0.86, meaning that the market is operating at 86 percent of the normal economic and housing market activity based on current prices, employment data and permits.
“This index shows that most housing markets across the nation are continuing a slow, gradual climb back to normal levels,” said NAHB Chairman Rick Judson. “Policymakers must guard against actions that could impede or even reverse the modest gains of the past year.”
November figures were alongside the December LMI because the October partial government shutdown hampered data collection. According to the November LMI, 55 markets returned to or surpassed pre-recession activity, and the nationwide market was at 85 percent of normal activity.
Of the largest metro areas, Baton Rouge, La., was at the top of list with a score of 1.42, showing that the city has surpassed pre-recession levels of activity by 42 percent. Other markets that have exceeded previous activity included Honolulu, Oklahoma City, Pittsburgh, Houston and Austin, Texas.
Carrying the load
David Crowe, chief economist for the NAHB, stated the most significant gains were in smaller metro areas.
“Smaller markets are leading the way, particularly where energy is the primary economic driver,” said Crowe. “Nearly half of the markets in the top 54 are in the energy states of Texas, Louisiana, North Dakota, Wyoming and Montana.”
Odessa and Midland, Texas, had high LMI scores – exceeding 2 points – that indicated their current activity is two times stronger than pre-recession levels. These two metro areas were followed, in descending order, by Casper, Wyo.; Bismarck, N.D.; and Grand Forks, N.D.
A hopeful future
The current LMI is a sign of sustainable growth going into 2014.
“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,” said Kurt Pfotenhauer, vice chairman of First American.