The National Association of Home Builders (NAHB) released its latest Home Builders/First American Leading Markets Index (LMI) over the weekend showing that across the nation, 197 metro area markets out of 337 have returned to or exceeded their last normal levels of economic and housing activity in the third quarter of 2017.
The current Index shows a year-over-year net gain of 40 markets. The nationwide score was up slightly to 1.03, meaning that based on current permit, price and employment data, the nationwide average is running at 103% of normal economic and housing activity. Meanwhile, 84% of markets have shown an improvement year over year, according to the NAHB.
Baton Rouge, Louisiana topped the list again of major metros on the LMI, with a score of 1.74 — or 74% better than its historical normal market level. Other major metros leading the group include Oxnard, Calif.; Austin, Texas; Honolulu; and Provo, Utah. Rounding out the top 10 are San Jose, Calif.; Nashville, Tenn.; Spokane, Wash; Los Angeles; and Salt Lake City.
Among smaller metros, Odessa, Texas, has an LMI score of 2.25, meaning that it is now at more than double its market strength prior to the recession. Also at the top of that list are Midland, Texas; Walla, Walla, Wash.; Florence, Ala.; and Kingston, N.Y.
Housing permits are lagging at 56% well behind the numbers of home price levels which are well above normal at 155%.
National employment levels are at 99% and at or above normal levels in 118 markets. This marked a 10% jump over last quarter.The housing permit numbers are growing as well with a number of markets at or above normal levels grew to 70 — a 6% increase over the last quarter.
The NAHB said the LMI data shows that permits have recovered from losses earlier in the year, but remain the sluggish component of the index.
NAHB Chairman Granger MacDonald, a home builder and developer from Kerrville, Texas had issued this statement along with the LMI Index;
“This report indicates that housing is growing at a gradual pace in markets nationwide, even as many parts of the country continue to recover from the recent hurricanes. Continued job growth and increasing household formation should help the housing market make additional gains as we begin to close out 2017.”
“Home price appreciation remains the strongest component of the HMI, and strong employment numbers also bode well for the continued growth of the housing sector,” said NAHB Chief Economist Robert Dietz. “While permits continue to inch upward, they remain the weakest element of the index and show that builders need to manage supply-side hurdles, such as rising material prices and labor shortages.”
“The number of metro areas on this quarter’s LMI at or above 90 percent has hit 271 — over 80 percent of all markets,” said Kurt Pfotenhauer, vice chairman of First American Title Insurance Company, which co-sponsors the LMI report. “This indicates that the overall housing market continues to move toward a full recovery.”