The Advanced March NAHB/First American Leading Markets (LMI) Index remained unchanged in March at .87 from February but the number of markets considered at or above their last normal period increased from 58 to 59 markets from February to March and from 47 to 59 year-over-year. In addition, the number of markets doing better than the national market rose from 147 markets to 152 markets month-over-month. The index is calculated for 351 markets or metropolitan statistical areas as defined by the federal government.
The LMI measures proximity to a normal market by comparing the last 12 months of activity in three areas to the last time these indicators were on a normal or sustainable path. The three local indicators are single-family permits, home prices and employment levels. The previous 12 months is compared to the annual average from 2000- 20003 for permits and prices and to 2007 for employment levels. Each is calculated as a ratio and averaged for the overall market indicator. Values above one indicate collective activity is above the last period of normalcy.
The index calculation for March is an advanced estimate because the employment estimates for each market were not available so the February levels were used along with more recent estimates for permits and prices. As a result, the component employment index for each market did not change. On a national scale, the permit component did not change but was up for 100 markets, down in 113 and the same in 138 markets.
While the national index value did not change, 32% of the markets did see an index increase from February to March and 84% increased year-over-year. The gradual but persistent increase in the number of markets improving and moving beyond the last normal period is further indication of the slow but steady process of resolving the economic and housing problems that developed and worsened during the Great Recession but are gradually moving aside for growth.