The number of U.S. housing markets showing consistent improvement in three key measures of strength expanded by 22 in November to a total of 125, according to the latest National Association of Home Builders/First American Improving Markets Index (IMI). This marks a third consecutive monthly gain for the index, which now includes representatives from across 38 states as well as the District of Columbia.
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 November include such geographically diverse locations as San Diego, Calif.; Gainesville, Fla.; Omaha, Neb.; Louisville, Ky.; and Charlotte, N.C.
"Not only did 22 additional markets qualify for the improving list in November, but the geographic distribution of included metros expanded from 33 states to 38 (plus the District of Columbia), while 97 out of 103 markets retained their spots on the list from the previous month," said Barry Rutenberg, chairman of the NAHB and a home builder from Gainesville, Fla. "This shows that a housing recovery is firmly taking root and helping generate needed jobs and economic growth across much of the country—though we know that this expansion could be even stronger were it not for ongoing challenges including overly tight lending conditions and difficult appraisals."
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, housing 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 consecutive months following those measures' respective troughs before being included on the improving markets list.
"The solid increase in the number of improving housing markets this month illustrates the degree to which the housing recovery has gained momentum since we initiated the IMI last year," said NAHB Chief Economist David Crowe. "Compared to the 30 markets that made the list as of November 2011, we now have 125, which is about one-third of all the markets surveyed for this index."
Kurt Pfotenhauer, vice chairman of First American Title Insurance Company, said, "This new high point for the Improving Markets Index provides the latest evidence that housing has turned a corner due to rising demand from consumers who are increasingly confident about the direction of local home values."