Number of Improving Housing Markets Almost Doubles

Econintersect: The headline trumpets good news about housing from Realtor Mag, a publication of the NAR (National Association of Realtors). In September, almost double the number of housing markets moved into the “improving” category compared August, according to the National Association of Home Builders/First American Improving Markets Index (IMI), which debuted last month. Twenty-three housing markets qualified as “improving” compared to twelve in August.  Metro areas are considered “improving” if they show an improvement in housing permits, employment, and housing prices for at least six months. Seven Texas cities appear on the list. Other states with more than one market on the list are Louisiana (3) and Arkansas, Iowa and North Carolina with two each.From Realtor Mag:

Both the number and geographic diversity of improving housing markets expanded this month, with Iowa, Illinois, and South Carolina all newly represented by one entry or more on the list,” Bob Nielsen, NAHB chairman, said in a statement. “This is further evidence that, despite the tough conditions that persist in many cities, pockets of improvement are emerging in local housing markets across the country.

The following are the 23 markets labeled “improving” in October, according to NAHB’s index:

• Alexandria, La.
• Amarillo, Texas
• Anchorage, Alaska
• Bismarck, N.D.
• Casper, Wyo.
• Fairbanks, Ark.
• Fayetteville, N.C.
• Houma, La.
• Iowa City, Iowa
• Jonesboro, Ark.
• Kankakee, Ill.
• McAllen, Texas
• Midland, Texas
• New Orleans, La.
• Odessa, Texas
• Pine Bluff, Ark.
• Pittsburgh, Pa.
• Sherman, Texas
• Sumter, S.C.
• Waco, Texas
• Waterloo, Iowa
• Wichita Falls, Texas
• Winston-Salem, N.C.

There is no deep history for this index. According to Realtor Mag, it debuted last month. However, the NAHB web site does show a graph that indicates the data exists back to December, 2010.

Before you get too excited over this great housing market news, the methodology for the IMI is discussed on the NAHB web site. There it is disclosed that the 24 “improving” housing markets were identified in a list of “approximately 360.” None of the 20 major housing markets are on the “improving” list as yet.  When the press release says “pockets of improvement” they are referring to about 6% of the market metros and far less than 6% of the number of homes, since none of the top 20 metros (which Econintersect has determined contain well over 60% of the market) are included.

There are a few spectacular increases since the troughs, which occurred in 2010 for all 23 price points and as far back as 2007 and 2008 for permits and employment troughs. But 15 of the 23 price increases are less than 3% and four more are less than 4%. Perhaps the most notable data point is the 7.3% rise for home prices in Pittsburgh since January. Pittsburgh is one of the two largest metros on the list, with a metro area population of 2.4 million.  New Orleans, which has a slightly larger city population, has a metro area encompassing 1.4 million.  (Population data is from Wikipedia.)

The second biggest price rise was for Kankakee, IL (6.9%), followed by Bismark, ND (6.6%) and Sherman, TX (5.7%). No other “improving” metro had price increases higher than 3.5%, which was the mark hit by Winston-Salem, NC. The table with all the data follows:

Sources: Realtor Mag and NAHB