The National Association of Home Builders [1] (NAHB) released its Q3 Leading Markets Index [2] (LMI) report Thursday, and the verdict is: National housing recovery is getting there, slowly but surely.
For months, NAHB has been reporting [3] that recovery in the national and in most metro markets is inching its way back to normal levels. The latest report virtually mirrors the LMI report released in August [4], which stated that 56 of 350 metros were at or better than normal, and the national housing market overall was 89 percent of where it should be.
Now, those numbers are 59 out of 350 and 90 percent nationwide. Year over year, this is an additional seven metros at or better than normal and an improvement in 66 percent of all markets compared to Q3 of 2013.
The LMI looks at average permit, price, and employment data over a 12-month period, then divides each by their annual averages over the last period of normal growth. For single-family permits and home prices, 2003 is considered the last normal year; for employment, 2007.
As it has this whole year, Baton Rouge, Louisiana, tops the list of major metros on the LMI. Baton Rouge, according to NAHB, is 39 percent better than its last normal market level a decade ago. Other major metros doing far better than what would be considered normal include Austin, Honolulu, Oklahoma City, Houston, Los Angeles, San Jose, Salt Lake City, New Orleans, and Charleston.
Some smaller metros are doing even better. Midland and Odessa, Texas, for example, are twice as strong as they were before the recession. Grand Forks and Bismarck, North Dakota; and Casper, Wyoming, are also doing far better now than they were 10 years ago.
For markets not all the way back, things are nevertheless up.
"Nearly half of all the markets on the Leading Markets Index are up since August, which is a good sign that the ongoing housing recovery will keep moving forward in 2015," said Kurt Pfotenhauer, vice chairman of First American Title Insurance Company [5], which co-sponsors the LMI report.
According to NAHB chairman Kevin Kelly, markets are recovering at a slow, gradual pace, and continued job creation, economic growth and increasing consumer confidence "should help spur pent-up demand for housing."
Where there is room for improvement is in the area of permits for new construction.
"An uptick in the number of single-family permits, which is currently only 44 percent of normal activity, is the key to a full-fledged housing recovery," said David Crowe, NAHB's chief economist. "In the 17 metros where permits are at or above normal, the overall index shows that these markets have fully recovered."