A total of 255 metropolitan areas across 49 states and the District of Columbia qualified to be listed on the National Association of Home Builders/First American Improving Markets Index (IMI) for July. This is down slightly from the 263 metros that made the list in June, but is more than triple the number of metros that were on it in July of 2012. The IMI identifies metropolitan areas that have shown improvement from their respective troughs in housing permits, employment and house prices for at least six consecutive months. Six new markets were added to the list and 14 were dropped from it in July. Newcomers include the geographically diverse metros of Cumberland, Md.; Saginaw, Mich.; Farmington and Las Cruces, N.M.; Kingston, N.Y.; and Olympia, Wash.
"This is the sixth straight month in which at least 70 percent of all U.S. metros have qualified for the Improving Markets Index," said NAHB Chairman Rick Judson. "The relative stability of the IMI is representative of the broad recovery underway, which is much more extensive than what we were looking at one year ago."
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 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 metro 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.
"Despite slight ups and downs in recent IMI levels, an overwhelming majority of U.S. metros—including those located in almost every state—remain solidly on the path to recovery even as the pace of their improvement is slowed by ongoing challenges related to the availability of credit, labor, lots and certain building materials," said NAHB Chief Economist David Crowe. "Based on recent trends in home prices, housing permits and employment, the outlook for a continued housing expansion remains very positive for the remainder of 2013."
"The fact that more than two-thirds of all U.S. housing markets continue to be represented on the improving list should be a boon to consumer confidence at a time when many are looking to take advantage of today's very favorable mortgage rates," said Kurt Pfotenhauer, vice chairman of First American Title Insurance Company.