Improving Markets Soften Slightly

The NAHB/First American Improving Markets Index fell by 15 to 258 metropolitan areas in May. The decline was due to 19 areas falling off the index while four were added. The primary cause for leaving the list was softness in house prices. The 15 metropolitan areas that were dropped from the list because of a fall in house prices had an average price increase in April (the last month on the list) of 1.6 percent while the markets that remained on the list had average house prices increases of 6.7 percent.

 
The 258 metropolitan areas on the list represent over 70 percent of all metros and every state has at least one market on the list. An improving market is one where there has been a six month or more improvement in house prices, single-family building permits and employment. These three critical indicators of a local market health have proven to be good indicators of the overall health of a housing market.

 
The slight decline is in line with a similar decline in the index last year as winter house prices begin their seasonal weakness. The May to June 2012 index dropped 20 percent but the current weakness was less than 6 percent as house prices have gained more stability and momentum since 2012.

 
Texas and California lead the list with 21 metro markets on the list each. Florida is third with 17 markets followed by Michigan at 11 and Indiana at 10.

Number of Improving Housing Markets Steady in April

Following seven consecutive months of gains, the list of improving U.S. housing markets remained virtually unchanged in April, with 273 metros on the National Association of Home Builders/First American Improving Markets Index (IMI).

After a strong run-up through late 2012 and early 2013, the number of improving markets is holding steady at a high level. We can expect to see more gradual gains going forward as challenges related to increased demand kick in – including everything from tightened supplies of developable lots and skilled labor to the rising cost of building materials.

The stability in the improving markets list this month is encouraging, with three quarters of all metros tracked by our index considered on the upswing as the spring buying season begins. In some markets, the main thing that’s holding back a recovery is a relatively thin inventory of homes for sale, which could be resolved if builders had easier access to credit for building homes and putting people back to work.

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 track improvement in metropolitan statistical areas (MSAs). 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. 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.

List of Improving Housing Markets Grows to 274 in March

The list of major markets (MSAs) included in the National Association of Home Builders/First American Improving Markets Index (IMI) grew to 274 out of a possible 361 in March, from 259 in February. With 76 percent of the markets included the housing market recovery is on more solid footing than it was at this time last year.

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. The index has shown steady growth over the past year as national measures of housing market improvement including housing starts and house prices have also shown consistent strength.

While we expect this positive momentum to continue, it’s important to understand that many markets are just beginning the recovery process, and that numerous issues – from credit availability to the rising cost of building materials and emerging lot shortages – are slowing the pace of that advancement.

The expanding housing recovery is energizing communities nationwide by generating jobs and local tax revenues and it could be an even more potent force for economic growth if credit for building and buying homes was more readily available.

Improving Markets Index Leaps to 201

The number of metropolitan areas designated as improving by the NAHB/First American Improving Markets Index (IMI) leaped to 201 in December. The index measures the number of markets that have seen an improvement in three primary market indicators, single-family building permits, home prices and employment, for at least six months. The IMI stood at 125 in November and was amplified in December by the addition of 84 new markets and the loss of 8 markets primarily because house prices fell back below a previous low. The 61 percent increase from November to December is the second largest monthly increase in the 16 month history of the index. The index increased 85 percent from 41 to 76 in January 2012.

 
The increase in the number of markets satisfying the criteria now places at least one MSA on the list in 44 states and the District of Columbia. The broad distribution of markets is an indicator of the breadth of the recovery that has been budding for over a year. A full list of the markets making the list is available here.

 
When the index was introduced in September 2011, 12 markets were on the list. The number increased steadily until early spring 2012 when the index value dipped to 80 and remained stalled for several months. Since late summer, the index has more than doubled. The softness beginning in early spring and the surge beginning late summer are partially a result of the price component used. Home prices are measured using a not-seasonally adjusted measure produced by Freddie Mac. Unadjusted home prices tend to rise during the spring and summer sales periods and soften during the late fall and winter months. The softness in the index in early spring 2012 was likely a result of that seasonality and we can expect the peak in December may weaken slightly in the coming months.

List of Improving Housing Markets Expands to 125 in November

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 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, Georgia; 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.

The 125 markets on the IMI now represents about one-third of all the markets surveyed for this index.

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.

List of Improving Housing Markets Eclipses 100 in October

A total of 103 housing markets across the United States qualified to be listed on the National Association of Home Builders/First American Improving Markets Index (IMI) for October, released today. This is up from 99 markets listed as improving in September and is the largest number of metros on the IMI since it was created one year ago. A total of 33 states and the District of Columbia are represented on the October list.

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 October include such geographically diverse locations as Santa Cruz, Calif.; Pocatello, Idaho; Abilene, Texas; and Savanna, Ga.

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, 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 metropolitan area must see improvement in all three measures for at least six months following those measures’ respective troughs before being included on the improving markets list.

Improving Markets Index: Erie, PA MSA

NAHB recently unveiled an index that tracks housing markets on the mend, the NAHB/First American Improving Markets Index (IMI).  The IMI highlights the fact that housing markets are local and that there are metropolitan areas where an economic recovery is underway.  The index measures three readily available monthly data series that are independently collected and indicative of improving economic conditions.  The three series are employment, house prices and single family housing permit growth.

For the twelfth release , 99 markets are classified as improving under a conservative examination of local economic and housing market conditions.  Among these areas is the Erie, Pennsylvania metropolitan statistical area (MSA).

The improvement of the Erie economy and its housing market is due to several factors including a recovery in manufacturing, which employs about 25% of the workforce, its position as a major retail center, drawing shoppers from the tri-state area (OH, NY and PA) as well as Canada, and its position as a fast growing regional healthcare center with a number of large hospitals including UPMC Hamot, Millcreek Community Hospital, and St. Vincent Medical Center.  In addition there is Saint Mary’s, a large nursing home with numerous facilities and Regional Health Service Inc. with many offices scatterd across the area and the already large and expanding  Lake Erie College of Osteopathic Medicine (LECOM) which has a medical school, school of pharmacy and a new dental school.  Erie also benefits from a steady stream of tourists who travel from Cleveland, Pittsburgh and Buffalo to enjoy access to Lake Erie and beautiful Presque Isle.  Erie is also home to a number of colleges including (Penn State) Berhend College, Gannon University, Mercyhurst University and Edinboro University.  Lastly, Erie is home to the Erie Insurance Group, GE Transportation Systems which makes among other things locomotives, Plastek Industries and a large Lord Corporation facility.            

According to home builder Mike Corsi, Vice President of the C & C Development Group, “things are definitely getting better.  The combination of growth at the hospitals and universities and turnover at our large firms has guaranteed a steady stream of well paid households that continually relocate here for work.  In addition, growth at LECON has resulted in a shortage of rental apartments for the students and increased demand for housing from new faculty that frequently results in a demand for new housing.   We are also witnessing a rise in remodeling activity.  It’s being caused by the simultaneous realization by many home owners that they will be staying their existing house for a while longer, and that home prices are on the upswing.”  He concluded by saying “tourism also is a big help.  While many tourists come just for the weekend to enjoy the water, the vineyards or skiing, others buy cottages and stimulate the economy in that way.”              

According to Jim Grieshober, Owner of J.E. Grieshober Plumbing-Hydronics , “Erie never saw huge increases in real estate prices and as a result has not seen much in the way of a decline either.  We miss the highs and the lows.  And, of late pent-up demand is starting to make itself felt among those who are more secure in their job and can get a loan.  Things would be even better if only the credit situation improved and if new regulations that add thousands and thousands to the price of a new house had not been passed.  That being said, the cost of living is low, Lake Erie is quite a draw and there is not much inventory around.”  Whatever the cause, house prices are definitely firming.  They are up 1.4% since the trough in February 2011 and are off less than 3.7% from their all–time high set in December 2009.    

Improving economic conditions have resulted in payroll employment being down exactly 2% from its peak in June 2000 and up by a healthy 9.9% since the trough in January 2010.  Single family permitting activity is up 8.0% on a seasonally adjusted monthly average basis from the trough set in April 2011.  While new homes are being built in many parts of Erie, activity has been primarily centered in a ring around the outskirts of Erie extending from Girard Township, Fairview Township and Millcreek Township in the west, through Summit Township in the south and Harborcreek Township in the east.

Improving Markets Index: Palm Bay, FL MSA

NAHB recently unveiled an index that tracks housing markets on the mend, the NAHB/First American Improving Markets Index (IMI).  The IMI highlights the fact that housing markets are local and that there are metropolitan areas where an economic recovery is underway.  The index measures three readily available monthly data series that are independently collected and indicative of improving economic conditions.  The three series are employment, house prices and single family housing permit growth.

For the twelfth release , 99 markets are classified as improving under a conservative examination of local economic and housing market conditions.  Among these areas is the Palm Bay-Melbourne-Titusville, Florida metropolitan statistical area (MSA).

The turnaround in the Brevard County economy and its housing market is due to several factors including a steady rise in tourism and recreation expenditures compared to 2010 including a rise of almost 10% in the number of multi-day cruise passenger traffic departing from Port Canaveral.  The area also benefits from its position as a large regional healthcare center with three large healthcare systems including Health First, Inc., Holmes Regional Medical Center and Wuesthoff Health System, Inc., which together employ close to 11,000 persons.  Brevard County is also is home to Patrick Air Force Base, Cape Canaveral Air Force Station, the US Air Force Malabar Test Facility, a naval Trident ballistic missile submarine turning basin and a Naval Ordnance Test Unit.  Brevard County also boasts a large number of high-tech firms such as Harris Corporation, Boeing, Northrop Grumman, Lockheed-Martin, Rockwell-Collins, Honeywell and many other firms that have recently grown and have largely made up for the gradual decline and eventual loss of the Space Shuttle program.   

According to home builder David Armstrong, President of Armstrong Custom Homes, “things are definitely getting better.  The combination of an active and aggressive Economic Development Corporation, the creation of the duty-free zone in Titusville and the expansion of many of the high-tech firms here are helping us backfill the loss of the space center.  In addition, the announcement that Space-X will be expanding here has also boosted buyer spirits.  We are also seeing a rise in remodeling.  Many owners now convinced that they will be staying their existing house for a while longer, are adding a second floor and or updating kitchens and bathrooms.  Another factor in the turnaround is that the national news is getting better and buyers are tired of waiting and are not getting younger.”  He concluded by saying “another indicator of our improving economy is the increase in small business activity.  More new business are opening and that too is helping.”              

According to Marcia Bartley, President of All Pro Title, Inc., “the inventory of existing homes is declining and that is putting upward pressure on prices.  On top of that there are no spec homes being built and the foreclosures that are on the market tend to be in poor condition and buyers are no longer willing to tolerate the false starts and delays that come with trying to purchase one of them.  As a result of these factors, appraisals are starting to rise and that gives prospective buyers increased confidence and as a result, a feeling of cautious optimism is starting to take hold.”  Whatever the cause, house prices are definitely firming.  They are up 6.4% since the trough in April 2011 and look to continue rising through the end of this year and into 2013 and beyond.    

Improving economic conditions have resulted in payroll employment being down less than 11% from its peak in May 2006 and up by 1.3% since the trough in December 2011.  Single family permitting activity is up 2.0% on a seasonally adjusted monthly average basis from the trough set in April 2009.  While new homes are being built in many parts of Brevard County, activity has been primarily centered in the Viera area where there is a new VA clinic, a new hospital, the government center, excellent shopping and is where the spring training home of the Washington Nationals is.  West Melbourne, between Melbourne and Palm Bay, is also a place where new construction activity is pronounced, in large part due to the excellent school system.

Improving Markets Index Expands To 99 in September

The number of improving housing markets across the country rose to 99 in September, up from 80 metros that were listed as improving in August. The index now includes representatives from 33 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 September include such geographically diverse locations as Tucson, Ariz.; Jacksonville, Fla.; Springfield, Ill.; Greenville, N.C.; and Bend, Ore.

More metros across the country are experiencing a sustained uptick in house prices, employment and new building activity as rising consumer confidence in local market conditions pushes more people to consider a new-home purchase. That said, overly tight lending conditions for builders and buyers continue to slow this process considerably.

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, 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 metropolitan area must see improvement in all three measures for at least six months following those measures’ respective troughs before being included on the improving markets list.

Improving Markets Index: Canton, OH MSA

NAHB recently unveiled an index that tracks housing markets on the mend, the NAHB/First American Improving Markets Index (IMI).  The IMI is intended to draw attention to the fact that housing markets are local and that there are metropolitan areas where economic recovery is underway.  The index measures three readily available monthly data series that are independently collected and are indicative of improving economic health.  The three are employment, house prices and single family housing permit growth.

For the eleventh release , 80 markets are currently classified as improving under a conservative examination of local economic and housing market conditions.  Among these areas is the Canton-Masillion, Ohio metropolitan statistical area (MSA).

The health of the Canton housing market is in part due to its business friendly environment and low state and local taxes, and the presence of four growing colleges and universities including Stark State College with a student population of over 15,000, and Walsh University with an enrollment of about 3,000.  Canton also benefits from being a growing regional healthcare center with Aultman Hospital and its 5,000 employees as well as Mercy Medical.  However of late, Canton’s growth is primarily, due to the all important Utica shale, a rock layer several thousand feet below the Marcellus shale, and which lies directly below Canton.  As a result Chesapeake Energy, Exxon, Anadarko, Chevron and others are starting to drill and other energy related firms including Slumberger, Baker Hughes, Michael Baker Corporation, and J-W Wireline are all setting up shop.  Canton also benefits from the presence of national firms like Belden Brick, Marathon Petroleum and GE Capital and is the Global headquarters of The Timkin Company and Diebold Incorporated.     

According to home builder James Rudo, President of VictoryGate Custom Homes, “drilling companies as well as oil and gas service companies are setting up operations.  While the Utica shale is just starting to be exploited through fracking and horizontal drilling, the effects of it are being felt in many ways.  For example field managers and executives are beginning to relocate here and these new households not only need housing but often want new houses.”  He went on to say that, “there is not much standing inventory and what little exists is in poor shape.  As a result it is often cheaper to build a new home than buy an existing house and remodel it.  As a result holding a spec is hard as everything sells.  As a matter of fact, things are so good we just hired a new supervisor.”  He closed by saying “referrals are a huge part of our business and we augment it with some light advertising.     

According to Barbara Bennett, President, a managing partner at the engineering firm Hammontree & Associated, Limited, “because of the Utica shale our hotels are full, are restaurants are all busy, there are no vacant storage facilities or warehouses, and there is a constant shortage of truck drivers.  In addition, there is a dramatic up-tick in industrial development and infrastructure improvements.  As a result of this added activity, not to mention the cashing of royalty checks by landowners, the local economy is more vigorous than ever.  As a matter of fact, we are currently working with developers on two brand new subdivisions.”  As a result, house prices have held up well over the past few years.  Prices are up 1.6% since the trough in January 2011 and are off less than 19% from their all-time high set in June 2006.     

Improving economic conditions have resulted in payroll employment being off just 6.2% from the high of the past decade set in July 2002 and up by 7.8% since the trough in October 2009.  Single family permitting activity is up a robust 9.7% on a seasonally adjusted monthly average basis from the trough set in November 2011.  While new homes are being built in many parts of the Canton MSA, activity has been primarily centered in northern Stark County including the City of Green and Jackson Township.