Housing Markets Continue Gradual Climb Back to Normal

September 2016

Markets in 146 of the approximately 340 metro areas nationwide returned to or exceeded their last normal levels of economic and housing activity in the second quarter of 2016, according to the NAHB/First American Leading Markets Index released Aug. 4. This represents a year-over-year net gain of 66 markets.
The index’s nationwide score ticked up to .97, meaning that based on current permit, price and employment data, the nationwide average is running at 97 percent of normal economic and housing activity. Meanwhile, 91 percent of markets have shown an improvement year over year.
“Among the LMI components, house prices are making the most far-reaching progress, with almost 97 percent of markets having returned to or exceeded their last normal levels. Meanwhile, 78 metros have reached or exceeded normal employment activity,” said NAHB Chief Economist Robert Dietz. “Single-family permits have edged up to 50 percent of normal activity, but remain the sluggish element of the index.”
Baton Rouge, La., continues to top the list of major metros on the LMI, with a score of 1.61—or 61 percent better than its last normal market level. Other major metros leading the list include Austin, Texas; Honolulu; and San Jose, Calif. Rounding out the top 10 are Houston; Provo, Utah; Spokane, Wash.; Nashville, Tenn.; Los Angeles and Oklahoma City.
Among smaller metros, both Odessa and Midland, Texas, have LMI scores of 2.0 or better, meaning that their markets are now at double their strength prior to the recession. Also at the top of that group are Manhattan, Kansas; Walla Walla, Wash.; and Grand Forks, N.D.; respectively.