October 7th, 2012
Econintersect: The NAHB (National Association of Home Builders) reports that the list of improving real estate markets has expanded to 103 metros. This metric, tracked by the National Association of Home Builders/First American Improving Markets Index (IMI), now has 103 metro markets included, the result of 11 markets being added to the list while 7 markets slipped back to "not improving" status. The index has reached a new high since its creation one year ago in September.
The monthly index — created by the National Association of Home Builders and First American — identifies metro areas that have shown improvement in housing permits, employment, and home prices for at least six consecutive months. For October, 92 markets were retained from the September list of 99.
Here is the graph of the IMI as produced by the NAHB:
Econintersect last reported on the IMI in April. At that time the index was at 101 and from that article:
After five months of gains in the IMI the rate of gain is slowing, reaching a "plateau" according to the NAHB.
That assessment now seems quite uninspired since the index dropped by 20% for the three summer months. Should we expect more disappointment from the open 'celebration' of a new all-time high by just 2% six months later?
The following is the list of the 103 metros ranked in order of average price rise from the trough:
The first map below shows the geographic location of the improving housing markets for October 2012:
For comparison the map from six months ago (April 2012):
Econintersect has compared the April list to the October list. Almost half (47) of the 101 markets on the IMI list in April are not there six months later, including five of the top ten price gain markets in April. The eight largest metros falling off the list were Minneapolis, Denver, Jacksonville (FL), Indianapolis, Nashville, Charlotte, Rochester and Buffalo.
Editor's comment: Because this index is so new there is not a historical baseline to establish what "normal" turnover for this index would be. Until more is known Econintersect would suggest that 6 month turnover near 50% in the housing markets classified as improving may be indicating that there is not a general improvement trend started for many of the country's housing markets.
The full press release from the NAHB:
October 4, 2012 - A total of 103 housing markets across the United States qualified to be listed on the National Association of Home Builders/First American Improving Markets Index (IMI) for October, released today. This is up from 99 markets listed as improving in September and is the largest number of metros on the IMI since it was created one year ago. A total of 33 states and the District of Columbia are represented on the October 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. Markets added to the list in October include such geographically diverse locations as Santa Cruz, Calif.; Pocatello, Idaho; Abilene, Texas; and Savannah, Ga.
“While 11 new housing markets were designated as improving in October, 92 metros retained their spots on the IMI and just seven slipped from the list,” noted Barry Rutenberg, chairman of the National Association of Home Builders (NAHB) and a home builder from Gainesville, Fla. “This is an encouraging sign that the housing recovery is proceeding at a steady pace as firming prices and employment help spur new building activity, which in turn generates new jobs and more home sales.”
“The fact that most markets are maintaining their spots on the improving list from month to month is an important indication that the recovery trend is solidifying,” agreed NAHB Chief Economist David Crowe. “At the same time, overly tight credit conditions are certainly constraining consumers’ ability to purchase homes as well as builders’ ability to construct them.”
“The expansion of the improving markets list to more than 100 metros marks an important milestone on the road to recovery,” noted Kurt Pfotenhauer, vice chairman at First American Title Insurance Company. “For potential buyers across the country, it is becoming increasingly apparent that now is a good time to explore a new-home purchase.”
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 measures for at least six months following those measures’ respective troughs before being included on the improving markets list.
A complete list of all 103 metropolitan areas currently on the IMI, and separate breakouts of metros newly added to or dropped from the list in October, is available at www.nahb.org/imi.
Editor’s Note: The NAHB/First American Improving Markets Index (IMI) is released on the fourth business day of each month at 10:00 a.m., ET, unless that day falls on a Friday – in which case, the index is released on the following Monday. A full calendar of future release dates can be found at www.nahb.org/imi.
- More Housing Markets Added to 'Improving' List (Daily Real Estate News, Realtor Mag, 05 October 2012)
- List of Improving Housing Markets Eclipses 100 in October (Press Release, NAHB, 04 October 2012)
- Housing: Slight Improvement in Improving Markets List (GEI News, 07 April 2012)