The inaugural edition of the NAHB/First American Improving Markets Index for September 2011 is an index value of 12. The index counts the number of US metropolitan areas that fulfill a conservative definition of what constitutes economic improvement. The index is being introduced by NAHB as a counter measure to the drum beat of bad national economic and housing news. An economic recovery is taking place in the US but it is occurring in relatively small metropolitan areas that don’t make a national scale.
In order to be categorized as “improving”, a metropolitan area must see at least a six month improvement in all three critical elements of the local economy: single-family housing permits, employment and house prices. The data for each of these monthly indicators come from independent sources: building permits from the US Census Bureau, employment for the US Bureau of Labor Statistics and house price index from Freddie Mac. If all three measures are above their respective troughs for a period of six months, indicating some stability in their improvement, then the metropolitan area is deemed improving.
The index began at a value of five in December 2010 and has been increasing or remaining steady since. (See chart). The 12 metro areas are shown in the table along with the changes in the three measures that justify their placement. The 12 metros are heavily concentrated in energy producing areas but not solely. Metro areas in Texas, Louisiana, North Dakota, Wyoming and Alaska have benefited from increased energy production. Metro areas outside energy producing regions are also on the list, such as Pittsburgh and Bangor.
The index will be released every month on the fourth business day of the month.