In a nationwide analysis of 351 metros, the National Association of Home Builders (NAHB) found 300 have seen year-over-year economic gains. According to the group's Leading Markets Index (LMI), 59 metros have fully returned or even exceeded their last normal levels of both economic and housing activity.
Overall, the nationwide economic score rose slightly to .88, from a revised April reading of .87. "This means that based on current permit, price and employment data, the nationwide average is running at 88 percent of normal economic and housing activity. The index showed an overall reading of .82 a year ago," the NAHB said.
The LMI is calculated by taking the average permit, price, and employment levels for the past 12 months per metro, and then dividing each by the annual average over the last period of normal growth. An index above one means that a market has beat its previous normal level of activity.
"We have always said this recovery would be a slow but steady one, and I think this index continues to prove this," said NAHB Chief Economist, David Crowe. "The year started a bit slower than anyone could have anticipated but we still expect housing to play a greater role in aiding the overall economic recovery this year. The job market continues to mend and that should spur a steady release of pent up demand among home buyers."
Louisiana was home to the metro with the highest LMI. Baton Rouge, Louisiana kept its top position among major metros with a score of 1.41, or 41 percent better than its last normal market level. Other metros that beat previous market levels include Honolulu, Hawaii; Oklahoma City, Oklahoma; Austin and Houston, Texas.
"Our builder members tell us they are starting to see more optimism in the field," said NAHB Chairman, Kevin Kelly. "Mortgage rates are low, home prices are affordable and with the harsh winter behind us our latest surveys show builders are feeling more bullish about future sales conditions."
Keeping with recent trends, gains in the energy sector continue to fuel housing growth. Smaller metros near recent energy production hubs such as Odessa and Midland, Texas boast LMI scores of 2.0 or better, doubling previous market levels. Bismarck, North Dakota; Casper, Wyoming; and Grand Forks, North Dakota also top the list as strong energy sector-fueled markets.