U.S. Housing Markets Continue to Make Modest Gains, Says NAHB

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According to the National Association of Home Builders/First American Leading Markets Index (LMI), markets in 63 of the approximately 350 U.S. metro areas nationwide returned to or exceeded their last normal levels of economic and housing activity in the fourth quarter of 2014. This represents a year-over-year net gain of 11 markets.

The index's nationwide score moved up slightly to 90, meaning that based on current permit, price and employment data, the nationwide average is running at 90 percent of normal economic and housing activity. Meanwhile, 69 percent of markets have shown an improvement year-over-year.

"The markets are improving at a consistent pace," said NAHB Chairman Tom Woods, a home builder from Blue Springs, Mo. "A growing economy and rising consumer confidence should help drive the release of pent-up demand in 2015."

Baton Rouge, La., continues to top the list of major metros on the LMI, with a score of 1.41 - or 41 percent better than its last normal market level. Other major metros leading the list include Austin, Texas; Honolulu; Houston; and Oklahoma City. Rounding out the top 10 are San Jose, Calif.; Los Angeles; Salt Lake City; Charleston; S.C.; and Nashville, Tenn.

"The encouraging news is employment, where the number of metros that reached or surpassed their norms rose by 23 in a year," said NAHB Chief Economist David Crowe. "However, single-family permits are only at 44 percent of normal activity, and remain the sluggish component of the index."

"More than 80 percent of all metros saw their Leading Markets Index increase or hold steady over the quarter, a strong indicator that the overall housing market is making headway," said Kurt Pfotenhauer, vice chairman of First American Title Insurance Company, which co-sponsors the LMI report.

Looking at smaller metros, both Midland and Odessa, Texas, have LMI scores of 2.0 or better, meaning their markets are now at double their strength prior to the recession. Also leading the list of smaller metros are Grand Forks, N.D; Bismarck, N.D.; and Casper, Wyo., respectively.