Smaller Housing Markets Nearing ‘Normal’ Faster

December 6, 2013

The nationwide housing market is inching closer to “normal” levels and is operating at 85 percent of normal economic and housing activity, according to the the National Association of Home Builders/First American Leading Markets Index.

Nearly 16 percent – or 55 out of 350 metro areas – already have returned to or exceeded their last normal levels of housing and economic activity, according to the November index reading. 

The LMI evaluates 350 metro areas to gauge how close the markets are to approaching or exceeding their previous normal levels of economic and housing activity. The index factors in average permits, home prices, and employment levels for the past 12 months.

"This index shows that most housing markets across the nation are continuing a slow, gradual climb back to normal levels," says NAHB Chairman Rick Judson. 

Smaller metros accounted for the majority of markets that are at or above normal levels, says David Crowe, NAHB’s chief economist. 

“Smaller markets are leading the way, particularly where energy is the primary economic driver,” Crowe says. “Nearly half of the markets in the top 54 are in the energy states of Texas, Louisiana, North Dakota, Wyoming, and Montana. 

The smaller metro areas topping the list on the Leading Market Index were Odessa and Midland, Texas, followed by Casper, Wyo.; Bismarck, N.D.; and Grand Forks, N.D.

More than 125 markets on the November index showed activity levels of at least 90 percent of previous normal levels. 

For major metros, Baton Rouge, La., topped the list on the Leading Market Index – 42 percent better than its last normal market level. Other major metros topping the list for exceeding their previous norms were Honolulu, Oklahoma City, Austin, Houston, and Pittsburgh. 

Source: National Association of Home Builders

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