According to information from the NAHB/First American Leading Markets Index, markets in 146 of approximately 340 metro areas in the U.S. have returned to, or exceeded, “normal levels” of housing activity in the second quarter of 2016.
The index provides scores based on the average permit, price and employment for the past 12 months compared to the last period of “normal growth,” which is 2000-2003 for single family home prices and permits and 2007 for employment. So far, there has been a net year-to-year gain of 66 markets returning to normalcy, or better, according to information from the NAHB. And, 91% of all markets have shown improvement compared to last year. The index indicates that, overall, the nation has nearly returned to the baseline and is running at 97% of normal economic housing activity.
“This gradual uptick is in line with NAHB’s forecast for a slow but steady recovery of the housing market,” said NAHB Chairman Ed Brady. “With a strengthening economy, solid job growth and low mortgage interest rates, the market should continue on an upward trajectory throughout the rest of the year.”
Among major metro areas, Baton Rouge topped the list as it bested its last normal level by 61%. Austin, Honolulu and San Jose also scored well for major metro areas, according to information form the NAHB.
A second recently released NAHB index shows that builder confidence in the single family 55+ housing market continues to be positive, and is up from the first quarter of 2016. A score of more than 50 indicates that more builders view conditions as good than those that do not. The second quarter of 2016 scored a 57, up a point from the first quarter. The second quarter of 2016 represents the ninth consecutive quarter with a score above 50.
“Builders and developers for the 55+ housing sector continue to report steady demand,” said Jim Chapman, chairman of NAHB's 55+ Housing Industry Council. “However, there are many places around the country facing labor and lot shortages, which are hindering production.”
Although the U.S. Bureau of Labor Statistics described construction employment gains as modest, 14,000 seasonally adjusted jobs were added in July, and the unemployment rate for those in the construction field is down from 5.5 last July to 4.5 this year.
With respect to the 55+ single-family Housing Market Index (HMI), traffic of prospective buyers improved, while sales held and expected sales for the next half year dipped. For the 55+ multifamily condo index, expected sales for the next six months rose, present sales remained even and traffic of prospective buyers dipped, according to information from the NAHB report.
“Much like the overall housing market, this quarter’s 55+ HMI results show that this segment continues its gradual, steady recovery,” said NAHB Chief Economist Robert Dietz. “A solid labor market, combined with historically low mortgage rates, are enabling 55+ consumers to be able to sell their homes at a favorable price and buy or rent a home in a 55+ community.”