Markets in 59 of the approximately 350 metro areas nationwide returned to or exceeded their last normal levels of economic and housing activity in the third quarter of 2014, according to the most recent National Association of Home Builders/First American Leading Markets Index (LMI). This reportedly represents a year-over-year net gain of seven markets.
The index’s nationwide score moved up slightly from 0.89 in the second quarter to 0.90, meaning that, based on current permit, price, and employment data, the nationwide average is running at 90% of normal economic and housing activity. Meanwhile, 66% of markets have shown a year-over-year improvement.
“The markets are recovering at a slow, gradual pace,” said Kevin Kelly, NAHB chairman and a home builder and developer from Wilmington, Del. “Continued job creation, economic growth and increasing consumer confidence should help spur pent-up demand for housing.”
Baton Rouge, La., continues to top the list of major metros on the LMI, with a score of 1.39—or 39% better than its last normal market level. Other major metros leading the list include Austin, Texas; Honolulu; Oklahoma City and Houston. Rounding out the top 10 are Los Angeles; San Jose, Calif.; Salt Lake City; New Orleans and Charleston, S.C.—all of whose LMI scores indicate that their market activity now equals or exceeds previous norms.
“An uptick in the number of single-family permits, which is currently only 44% of normal activity, is the key to a full-fledged housing recovery,” David Crowe, NAHB chief economist. “In the 17 metros where permits are at or above normal, the overall index shows that these markets have fully recovered.”
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