Following seven consecutive months of gains, the list of improving U.S. housing markets remained virtually unchanged in April, with 273 metros on the National Association of Home Builders/First American Improving Markets Index (IMI).
After a strong run-up through late 2012 and early 2013, the number of improving markets is holding steady at a high level. We can expect to see more gradual gains going forward as challenges related to increased demand kick in – including everything from tightened supplies of developable lots and skilled labor to the rising cost of building materials.
The stability in the improving markets list this month is encouraging, with three quarters of all metros tracked by our index considered on the upswing as the spring buying season begins. In some markets, the main thing that’s holding back a recovery is a relatively thin inventory of homes for sale, which could be resolved if builders had easier access to credit for building homes and putting people back to work.
The IMI is designed to track housing markets throughout the country that are showing signs of improving economic health. The index measures three sets of independent monthly data to track improvement in metropolitan statistical areas (MSAs). The three indicators that are analyzed are employment growth from the Bureau of Labor Statistics, house price appreciation from Freddie Mac and single-family housing permit growth from the U.S. Census Bureau. A metro area must see improvement in all three measures for at least six consecutive months following those measures’ respective troughs before being included on the improving markets list.