Markets in 56 of the 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/First American Leading Markets Index. This represents a net gain of seven markets from last year.

Based on current permit, price and employment, the nationwide average is running at 89 percent of normal economic and housing activity; 78 percent of markets have shown an improvement over last year. "Things are gradually improving," said NAHB Chair David Kelly. "As the job market grows, we expect to see a steady release of pent up demand."

NAHB Chief Economist David Crowe agreed and added that the bright spot in these numbers is employment, "where the number of metro areas that reached or exceeded their norms grew from 26 to 46 in a year." 

What's more, in the 22 markets where permits are at or above normal, Kurt Pfotenhauer observed that the overall index indicates that these markets have fully recovered. The vice chair of First American Title Insurance Company, which cosponsors the NAHB/LMI report, said, "This finding shows the impact that an uptick in permits can have on the overall health of markets."

The LMI is calculated by comparing the current levels of three components — employment, which is derived from the Bureau of Labor Statistics; house prices, which comes from Freddie Mac and single family permits, which is provided by the Census — to their normal levels. The current level as a share of normal level is calculated compared for each component. The LMI is the average of these three shares.

 

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