The May NAHB/First American Leading Markets Index improved one point to .88 from a revised downward .87 in April. The index measures how close to normal are three economic and housing markets measures. The three components are single-family housing permits, house prices and employment levels. For the US, house prices have recovered from the rapid rise and crash to be 25 percent (index of 1.25) above their annual average in 2000-2003. Employment levels are close to recovered at .95 or 95 percent of their 2007 average. Single-family permits are the farthest from normal at 44 percent of their annual levels in 2000-2003.
Fifty-nine metro areas are at or better than normal with LMIs at or above one, which is two more than the revised 57 in April and 12 more than May 2013. More than half of the top 59 are in seven energy states of Texas, North Dakota, Wyoming, Louisiana, Montana and Pennsylvania.
About one-quarter of all metro areas showed improvement from month to month and 300 or 85 percent improved from May 2013.
The slow movement forward remains primarily a result of very slow movement in housing construction. The winter months of January, February and March saw little progress in total housing permit activity; the three month moving average did not change and the first quarter is down 3 percent from the fourth quarter 2013. The rest of the year continues to look promising as some of the winter slack is made up and overall economic growth induces more home buying.