The number of U.S. housing markets showed one of its first drops, falling slightly to 258 in May from 273 in April, according to the NAHB/First American Improving Markets Index (IMI). This monthly report shows sustained improvement in three key measures, and the total list for May, while down, does include entrants from all 50 states and the District of Columbia.
The IMI identifies metropolitan areas that have shown improvement from their respective troughs in housing permits, employment and house prices for at least six consecutive months. Four new markets were added to the list and 19 were dropped from it this month. Newcomers included the geographically diverse metros of Dothan, Ala.; Elizabethtown, Ky.; Salisbury, Md.; and Salem, Ore.
"The fact that over 70 percent of all U.S. metros are holding onto their spots on the improving list is definitely good news, and representative of the generally brightening outlook for housing markets nationwide," NAHB Chairman Rick Judson, a home builder from Charlotte, N.C., said "That said, our industry's progress on the road to recovery is being slowed by rising challenges related to the availability of credit, building materials, labor and lots for development."
"While seasonal trends in home prices resulted in an overall decline in the IMI this month, the index remains at a very strong level and continues to represent markets in every state," David Crowe, chief economist for NAHB, noted. "Some metropolitan areas that had previously charted marginal home-price gains dropped off the list this time as a result of typically softer prices seen in the winter months, which is similar to what the index showed in this same period last year."
"Today's report shows that the majority of U.S. metros are experiencing strengthening house prices, employment and permitting activity, which is a much more positive picture than the one we were seeing a year ago," Kurt Pfotenhauer, vice chairman of First American Title Insurance Co., said "That's the big picture on which consumers need to focus."
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 complete list of all 258 metropolitan areas currently on the IMI, and separate breakouts of metros newly added to or dropped from the list in May, is available at www.nahb.org/imi.