Housing: Slight Improvement in Improving Markets List

April 7th, 2012
in econ_news

nahb-logoSMALLEconintersect:  The NAHB (National Association of Home Builders) reports that the list of improving real estate markets has expanded slightly.  This metric, tracked by the National Association of Home Builders/First American Improving Markets Index (IMI), now has 101 metro markets included, the result of 13 markets being added to the list while 11 markets slipped back to "not improving" status.  After five months of gains in the IMI the rate of gain is slowing, reaching a "plateau" according to the NAHB.

Follow up:

Here is the graph of the IMI as produced by the NAHB:

Click on graphics for larger images.


While it looks like the IMI has reached a nearly maximum level, appearances can be deceiving.  There are approximately 360 metro markets for real estate.  The plateau, far from being near a high level, is less than 30% of the maximum possible.  Also, only six of the 20 major metro markets in the Case-Shiller Comp-20 Index are on the IMI list, again 30%.  Two of the top 20 markets rank in the upper 50% for price gain since the trough:

  • Detroit, ranks 33, +3.5%
  • Tampa, ranks 41, +2.9%

The other four major metros listed:

  • Washington, DC, ranks 57, +2.0%
  • Minneapolis, ranks 69, +1.6%
  • Denver, ranks 70, +1.6%
  • Charlotte, ranks 100, +o.1%

Here is the list of the 101 improving metro markets, ordered by state:



Below is the map showing the locations of the 101 improving metro markets:


The following table has the 101 markets ranked in order of price gain since the trough:



The full press release by the NHAB:

April 5, 2012 - The list of housing markets showing measurable improvement expanded slightly to include 101 metropolitan areas in April, according to the National Association of Home Builders/First American Improving Markets Index (IMI), released today. Thirty-five states (including the District of Columbia) are now represented by at least one market on the list.

The index identifies metropolitan areas that have shown improvement from their respective troughs in housing permits, employment and house prices for at least six consecutive months. The 101 markets on the April IMI represent a net gain of two from March, with 13 metros being added and 11 markets slipping from the list while 88 markets retained their places on it. Among the new entrants, areas as diverse as Rome, Ga.; Coeur d’Alene, Idaho; Greenville, N.C.; Brownsville, Texas; St. George, Utah; and Huntington, W.Va., are now represented on the IMI.

“While housing markets across the country continue to struggle under the weight of overly tight lending conditions and other challenges, the April IMI indicates that at least 101 individual metros are showing measurable and consistent signs that they are headed in the right direction,” said NAHB Chairman Barry Rutenberg. “A total of 35 states are now represented on the list, with 10 states having four or more entries. This positive news is in line with what our builder members have observed regarding firming conditions and improved buyer interest in certain locations.”

“After five consecutive months of gains, the IMI recently began to plateau, with many markets holding steady and a few experiencing the ups-and-downs that are typical in a choppy recovery,” observed NAHB Chief Economist David Crowe. “The IMI is designed to highlight markets that are showing consistent improvement, and those markets that have registered the smallest gains are more susceptible to dropping off the list due to a minor setback in prices, permits or employment,” he explained. At the same time, “as stronger markets approach stability, it will get harder for them to keep charting improvement, which will also limit the expansion of the IMI.”

“The fact that the number and geographic distribution of improving housing markets continued to expand beyond the 100 mark in April bodes well for the start of the spring home buying season, and should be an encouraging sign for those who are considering a home purchase,” added Kurt Pfotenhauer, vice chairman of First American Title Insurance Company.

The IMI is designed to track housing markets throughout the country that are showing signs of improving economic health. The index measures three sets of independent monthly data to get a mark on the top improving Metropolitan Statistical Areas. The three indicators that are analyzed are employment growth from the Bureau of Labor Statistics, house price appreciation from Freddie Mac, and single-family housing permit growth from the U.S. Census Bureau. NAHB uses the latest available data from these sources to generate a list of improving markets. A metropolitan area must see improvement in all three areas for at least six months following their respective troughs before being included on the improving markets list.

Meanwhile, according to Bill Briggs at MSNBC.MSN, there are thousands ofhomes around the country that are on the market for less than $10,000.  And in some markets entreprenuers are scooping these us for refurbishing as low rent properties with the potential to net returns of 20% to 30% a year just from the rents.

John Lounsbury


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