In the second quarter of this year, 146 of approximately 340 metro areas saw housing markets return to pre-recession levels, as their scores of the Leading Markets Index (LMI) reached or surpassed a baseline reading of 1 from this past April to June, according to the National Association of Home Builders/First American quarterly LMI release Thursday morning. This represents a year-over-year net gain of 66 markets.
“This gradual uptick is in line with NAHB’s forecast for a slow but steady recovery of the housing market,” NAHB Chairman Ed Brady said in a statement.
The index’s nationwide score posted an improvement from 0.95 to 0.97, meaning that the nationwide average now stands at about 97% of its normal status. In the mean time, 91% of markets have shown progress in local economy and housing activities compared to a year earlier.
The index—a composite score based on three factors: single-family building permits, home prices, and employment—compares the current housing market conditions to the pre-recession normal level. The last normal period for single-family permits and house prices is between the year 2000 and 2003, and for employment the year before the beginning of the Great Recession in 2007.
Among the three components, prices have recovered the fastest, with a current score of 1.43, which is 43% higher than the pre-recession level. Employment, now growing at a slower pace as the economy approaches nominal full employment, is approximately 97% of its normal level. A total of 78 metros have reached or exceeded normal employment activity.
Building permits, however, remain repressed. "Single-family permits have edged up to 50% of normal activity but remain the sluggish element of the index," Robert Dietz, NAHB chief economist, commented in a statement.
The overall U.S. housing market, which has been climbing consistently since mid 2014, is poised to be in good shape. “With a strengthening economy, solid job growth and low mortgage interest rates, the market should continue on an upward trajectory throughout the rest of the year,” said NAHB's Brady.
Read the full release on National Association of Home Builders here >>