The NAHB/First American Leading Markets Index rose slightly to .86 in December index from .85 in the November index. The index measures progress back to and beyond the normal level of economic and housing growth. In addition to the national index, the release also lists the value of progress toward normal for 351 metropolitan areas.
In December, 54 metros were at or above a value of one meaning those markets had returned to or were above their last normal levels of single-family housing permits, home prices and employment. For purposes of this index, the last normal period was 2000- 2003 for permits and prices and 2007 for employment. The index measure proximity to normal by comparing the last 12 months to a normal year and averages that ratio for the three indicators.
The most advanced 54 markets were dominated by energy and agriculture states and relatively smaller markets that did not see the rapid decline in production and prices that more volatile markets experienced. As a result, progress back to normal has been quicker. Alternatively, the markets that are the furthest from normal are in the industrial Midwest and some of the places were home prices took the largest increases and subsequent crashes.
Of the 351 metropolitan areas with data, 139 saw an increase in the index (closer to normal) and 36 saw a decline. In December, 167 markets (48% of all markets measured) were at or above the US level, which is down 2 markets from the 169 making the same or better than US in November.