(10/14/2011) Erate Exclusive - When it comes to recovery in the housing
market, perhaps it's time to adjust a certain leading indicator phrase to
"As goes Texas, so goes the nation."
That distinction traditionally has gone to California, but the second
installment of National Association of Homebuilders' (NAHB) American
Improving Markets Index (IMI) finds a big show in the big state of Texas
with seven towns among those showing housing market improvements sufficient
to put them on the road-to-recovery list.
California towns were nowhere in sight, as nearly one in three towns on
the list were from Texas.
The Texan towns making the list were, Amarillo, McAllen, Midland, Odessa,
Sherman, Waco and Wichita Falls.
Also, the index has swelled from only 12 towns last month, the first
month the report was issued, to 23 this month, nearly doubling the list. The
remaining towns that made the cut were:
• Alexandria, Houma, and New Orleans, LA
• Anchorage and Fairbanks, AK
• Iowa City and Waterloo, IA
• Jonesboro and Pine Bluff, AR
• Fayetteville and Winston-Salem, NC
• Bismarck, ND
• Casper, WY
• Kankakee, IL
• Pittsburgh, PA
• Sumter, SC
The index reveals metropolitan areas that have
shown improvement for at least six months in housing permits, employment and
housing prices.
Other than the Texas-Louisiana-Arkansas region revealing the
strongest regional pocket of recovery, housing market growth remains spotty nationwide.
"Both the number and geographic diversity of improving housing markets
expanded this month, with Iowa, Illinois and South Carolina all newly
represented by one entry or more on the list," said NAHB Chairman Bob
Nielsen, a home builder from Reno, Nev.
"This is further evidence that, despite the tough conditions that persist
in many cities, pockets of improvement are emerging in local housing markets
across the country," Nielsen said.
Bangor, Maine, was the only area from the original list to drop off in
October, due to a decline in local building permits, NAHB reported.
IMI uses single-family housing permit growth data from the U.S. Census
Bureau; employment growth data from the U.S. Bureau of Labor Statistics and
home price appreciation stats from Freddie Mac.
A metro area can't make it to the list unless it sees
improvement in all three areas for at least six months following a
respective market's bottom.
For each area, calculations are the product of:
• The current three-month moving average in single-family housing
permits, divided by the three-month moving average that ends with the bottom
of the market in single family permits, divided by the number of months
since the bottom of the market.
• The current number of jobs divided by the number of jobs at the bottom
of the market.
• The current price index, divided by the index value at the bottom of
the market. If there has been no bottom market, the value is zero.
"While Pittsburgh and New Orleans remain the two largest improving
markets, the October IMI is heavily weighted by smaller cities in which
energy and agriculture are the primary economic drivers and where the
effects of the recession have been less pronounced," said NAHB Chief
Economist David Crowe.
"In particular, Texas stands out for its seven entries on the improving
markets list," Crowe added.
Watch for the young-professionals' town of Austin to make a debut
soon.
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