Improving Markets Improve


The NAHB/First American Improving Markets Index (IMI) reached a new high of 291 in September. The addition of 49 markets was also the largest number new to the list since December 2012 when 84 markets were added. Five markets were dropped, four because of a fall back in prices and one because of a dip in permits.

The large increase in new markets on the list can be attributed to several changes. First, the house price index used for each metropolitan area is calculated by Freddie Mac. After some additional study, the Freddie Mac economist improved the accuracy of their index and the change in methodology increased the rate of appreciation in 89% of the metros on the list. The metro areas that were on the list in August and September recorded an average house price increase of 3.3% from August to September.

The increase could also be due in part to seasonality in the price index which tends to rise faster in the spring and early summer (the April price index was the latest available for the September IMI). A similar index increase occurred beginning in September 2012 as those seasonal house prices began to take effect.

Finally, house prices have been increasing nationally as more markets and more home sales exhibit rising demand with continued low supply levels.

The metro areas on the September IMI are located in every state except Connecticut and that state technically qualifies since two counties in the New York City metro area are in Connecticut. California has the most metros on the IMI, 24, followed by Texas at 21 and Florida at 18.

This will be the last edition of the NAHB/First American Improving Markets Index. The index was introduced in September 2011 to reinforce the fact that some markets were starting to show improvement while the national statistics stalled. As the number of markets on the IMI increased, the national measures started to show overall improvement. The IMI has contained more than 70% of all markets since early 2013. The national trend is now more reflective of the individual markets although the distance to a normal market remains wide across metropolitan areas. A new index will be introduced for the October release that will highlight markets approaching their normal level of economic activity.

IMI September 2013

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