by Broderick Perkins
(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.
"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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