Housing markets in 52 out of 350 metropolitan areas have returned to or exceeded their pre-recessionary levels of activity, according to the newly launched National Association of Home Builders/First American Leading Markets Index (LMI). The nationwide score of .85 indicates that based on current permits, prices and employment data, the nationwide housing market is running at 85 percent of normal activity.
The LMI shifts the focus from identifying markets that have recently begun to recover, which was the aim of a previous gauge known as the Improving Markets Index, to identifying those areas that are now approaching and exceeding their previous normal levels of activity. More than 350 metro areas are scored based on their average permit, price and employment numbers for the past 12 months and dividing each by their annual average over the last period of normal growth. For single-family permits and home prices, 2000-2003 is used as the last normal period, and for employment, 2007 is the base comparison.
"Smaller metros are leading the way to a housing recovery, accounting for 43 of the top 50 markets on the current LMI," NAHB Chief Economist David Crowe said in a statement. "This is very much in keeping with the results of our previous index for improving markets, and is an indication of the extent to which local economic conditions dictate the strength of individual housing markets."
