According to the National Association of Home Builders/First American Improving Markets Index for January, 242 out of 361 metropolitan areas have shown evidence of progression compared to the previous month when 201 cities experienced positive housing development. Entrants featured on the latest index come from 48 states and Washington, D.C.
Over the last two months, the IMI has almost doubled as stronger demand during prime home buying season boosted prices across many parts of the country, said David Crowe, chief economist for NAHB.
“Similar home price gains, and hence the IMI, may be tempered in the future as we see data from typically slower months for home sales,” Crowe continued.
The IMI identifies cities that are displaying signs of economic health from their respective troughs in housing permits, employment and house prices. The index measures three sets of independent monthly data to determine whether a metropolitan area is improving, including employment growth from the Bureau of Labor Statistics, housing price appreciation from Freddie Mac and single-family housing permit growth from the U.S. Census Bureau.
To make the list, a metropolitan area must see improvement in all three measures for at least six consecutive months.
In January, a total of 47 new metropolitans were added to latest list, including Los Angeles, Nashville, Cleveland, Richmond, Auburn, Ala., and Des Moines, Iowa.
However, six cities were dropped from this month’s index.
“The story is no longer about exceptions to the rule, but about the growing breadth of the housing recovery even as overly strict mortgage requirements hold back the pace of improvement,” said Barry Rutenberg, a homebuilder from Gainesville, Fla., and NAHB chairman.