By Gino Blefari, President & CEO, Intero Real Estate Services, Inc.
Slowly but surely, we’re seeing more and more metropolitan areas return to pre-recession activity levels, giving more steam to the housing recovery at the national level and more confidence in housing overall.
In its latest data release, the National Association of Home Builders found that 52 out of approximately 350 metro areas nationwide have now returned to or exceeded their pre-recession activity in housing. NAHB’s latest index puts housing at 85% of normal activity.
We’re in solid B+ territory if we were to grade housing like a college professor.
Of course, as with all averages, we know that some cities have a much higher or much lower GPA than the average for the whole class. But this is a pretty remarkable milestone moment in the broader view of the recovery.
At the top of NAHB’s index is Baton Rouge, La., which is performing 41% better than its last normal market level. Others at the top of the list that show their housing markets now exceed previous norms include Honolulu, Oklahoma City, Austin and Houston, Texas, and Harrisburg, Pa.
NAHB also points out smaller metros that are also outperforming pre-recession activity. Odessa and Midland, Texas, each are at double their strength prior to the recession, while Casper, Wyo., Bismarck, N.D.; and Florence, Ala., also are stronger.
In fact, in its release of the latest index, NAHB Chief Economist David Crowe said that smaller cities are leading the way to a housing recovery, accounting for 43 of the top 50 markets on the current index. This underscores how much local economies play into housing activity.
NAHB calculates the index by using employment growth data, house price appreciation data and single-family housing permit growth. They score more than 350 metro areas by taking their average permit, price and employment numbers for the past 12 months and dividing each by their annual average over the last period of normal growth.
It’s a different twist on past indices, and an interesting way to see more information about the housing recovery. Because we know that housing markets are so localized, it’s interesting to measure them by past performance rather than by ranking against national averages.
2013 has turned out to be a pivotal year in housing for many markets. But we still have one quarter left. At this stage, the biggest worry for everyone is how the government shutdown and ensuing fiscal situation plays out. Barring any major drama in that department, we’re likely to head into 2014 armed with a lot more confidence than we have had in years.