The NAHB/First American Improving Markets Index (IMI) increased in July to 84 from the June level of 80. The modest net increase was the result of an addition of 11 new metropolitan areas and a loss of seven areas. Six of the seven MSAs that were dropped from the list were because house prices fell back below their previous low and one because single-family building permits dropped below their former low point. Up to June, the average house price increases for the six dropped had been 0.2% compared to a 3.1% average increase for the MSAs remaining on the list. Harrisonburg VA fell off the list because permits fell below their last trough in October 2011.
The MSAs on the list represent 33 states and the District of Columbia and continue to show broad geographic distribution. House prices remain the most fragile of the three components of the IMI. Average permit growth was 4.1% from their respective troughs; average price growth was 3.1% and average employment growth is 4.8% from the respective troughs. National house price indexes have shown some positive movements in the past two months and these results should begin to show up in individual metropolitan areas as well.
NAHB expects the housing recovery to continue to be best shown through individual markets experiencing modest but continued growth in house price, building permits and employment.