Smaller Housing Markets Driving Gradual Economic Recovery
Real estate seems to be picking up all across the United States, but there is one trend that has been noticed by Chief Economist David Crowe of the National Association of Home Builders where the smaller markets are having the most success – all of these cities are located in “energy-driven” states. Louisiana tops the list of one of the energy states where the production of oil and natural gas are a prominent part of the economy. With the United States now supplying the majority of its own oil, energy states are thriving and making more money than they ever have before. Other energy states that are leading the way in improved housing market numbers are Texas, North Dakota, Wyoming, and Montana.
In Texas, Odessa and Midland have LMI (Leading Markets Index) scores that show that those real estate markets are performing twice as good as they were before the Recession. Casper Wyoming, Bismark, North Dakota, and Grand Forks, North Dakota also posted majorly improved housing scores according to the LMI. These cities are also located in the energy states. The NAHB will continue to watch this trend to see these states will lead the way on a housing recovery, which has been reported to be almost 100% by the end of 2015.
Economists as well as NAHB members see the housing recovery as a very slow, very gradual process that will continue to build as long as lobbyists and members of legislature continue to promote bills that encourage hassle-free homeownership. The Biggert Waters Act is an example of a bill that is now being amended because of the undue hardship it has put on residents in coastal regions who require flood insurance. Had the act been implemented as is, it would have hiked annual insurance premiums up by as much as $10,000.
The LMI has replaced a previous report named the IMI (Improved Markets Index) which also monitored approximately 350 cities, however, the statistics in this report were based on a different set of standards. In calculating the LMI, NAHB utilizes employment data from the Bureau of Labor Statistics, house price appreciation data from Freddie Mac and single-family housing permits from the U.S. Census Bureau. The LMI is published on the fourth working day of each month, unless that day falls on a Friday — in which case, it is released on the following Monday. To view more LMI reports and to see specific information about each city, you can click here.
