For the country as a whole, the NAHB/First American Leading Markets Index (LMI), released today, rose to .95 in the first quarter of 2016, .01 point higher than its level in the fourth quarter of 2015, .94, and .04 point higher than its level from one year ago, .91. The LMI is now .17 point above its low of .78 reached in March 2012. The index uses single-family housing permits*, employment, and home prices to measure proximity to a normal economic and housing market. The index is calculated for both the entire country and for 337 local markets, metropolitan statistical areas (MSAs). A value of 1.0 means the market (or country) is back to the last level of normality.
Nationally, all three components of the LMI contributed to the quarter-over-quarter growth in the nationwide score. Permits rose from .48 to .49, prices increased from 1.38 to 1.40, and employment rose from .96 to .97. Over the year, the permits, prices, and employment components expanded by .05, .07, and .02 respectively. Regionally, 119 of the 337 markets, 35%, have an LMI Score that is greater than or equal to 1.0 and are considered normal, up from 113 in the fourth quarter of 2015 and 74 last year.
While most markets do not have an Overall LMI Score that is greater than or equal to 1.0, a recovery in one or more components has taken place across a number of MSAs. For example, the number of areas where the permits component has recovered rose to 42, from 40 in the fourth quarter of 2015 and from 27 one year ago. Meanwhile, the number of markets where the employment portion has recovered reached 66, 4 better than last quarter and 19 above the number from 1 year ago, 47. The number of metro areas where house prices have reached normal totaled 324, 2 more than its level in the previous quarter and from 1 year ago. Over the quarter, 62% of metro areas recorded an increase in their LMI Score while 86% experienced growth over the year.