The NAHB identified 80 markets as showing measurable and sustained growth during June in its Improving Markets Index (IMI). Albeit down from May’s 100 markets, the index added 28 new markets and now includes at least one locale from 30 states and the District of Columbia. Newcomers include Tuscaloosa, Ala.; Grand Junction, Colo.; Fargo, N.D.; Knoxville, Tenn.; and Dallas. Twelve Texas markets top the list, followed by seven in Florida. Fifty-two metros maintained their position while 48 fell from the list.
That geographic diversity is “encouraging,” according to NAHB chief economist David Crowe, who in the release adds that it “highlights the degree to which local and economic job market conditions are what drive individual housing markets.” Local variation caused a handful of states to gain and lose markets: Arkansas, Colorado, Indiana, Louisiana, Michigan, North Carolina, New York, South Carolina, Tennessee, and Texas.
Economic uncertainty in various markets nationwide accounts for regular tremors in the index. Crowe says that many markets formerly on the list dropped out because the minimal gains in local home prices were “wiped out” by recent downward changes—something for which new metrics may be partly to blame. Crowe writes in the NAHB’s Eye on Housing blog that the June index was the first to use the not-seasonally-adjusted Freddie Mac metropolitan house price index from January 2012, a period during which housing prices tend to soften. Because the IMI was introduced in September 2011, Crowe notes, this is the first time the traditional soft spot in the home-price cycle has had a chance to impact the index.
The survey uses home prices, single-family permits, and employment rates to set its list—with the former being the “deciding factor” for indexing. Crowe writes that the 28 additions had an average home price appreciation of 1.9 percent in May whereas the 48 drops’ price appreciation was 3 percent in May. The 52 markets that stayed on the list had an average home price appreciation of 4.5 percent for the same period.
