Report: More housing markets on the mendby Marcie Geffner
The nascent U.S. housing recovery appears to be strengthening as the new year gets under way, according to the National Association of Home Builders (NAHB), a trade group in Washington, D.C., and CoreLogic, an analytics company in Irvine, Calif.
Markets on the mend
The number of U.S. cities where housing markets are improving rose again in January, when 242 metropolitan areas made the NAHB/First American Improving Markets Index list. That total was up from 201 markets in December. The number of markets on the list has almost doubled in the last two months as stronger demand for homes has boosted prices in a broader number of metros, David Crowe, NAHB chief economist, explained in a statement.
The improving markets list analyzes three main indicators:
- Employment growth from the U.S. Bureau of Labor Statistics
- Home price appreciation from Freddie Mac S
- Single-family housing permits from the U.S. Census Bureau
An area must show improvement in all three measures for at least six consecutive months before it’s considered to be an improving market.
“Today, 242 of 361 metros nationwide appear on the list, including representatives from almost every state,” said Barry Rutenberg, NAHB chairman and a home builder in Gainesville, Fla. “The story is no longer about exceptions, but the growing breadth of the housing recovery.”
Forty-seven metros were added to the list in January and six were dropped. Among those added were:
- Los Angeles
- Des Moines
- Hartford, Conn.
- Lansing, Mich.
- Nashville, Tenn.
- Reno, Nev.
- Richmond, Va.
Those dropped included:
- Montgomery, Ala.
- Crestview, Fla.
- Sebastian, Fla.
- Evansville, Ind.
- Vineland, N.J.
- Lima, Ohio
Shadow inventory on the decline
Separately, CoreLogic recently reported significant shrinkage of the so-called shadow inventory, which refers to homes that either involve a loan that’s seriously delinquent, in foreclosure or is an REO, but not listed for sale. The company said shadow inventory homes numbered 2.3 million in October 2012, a 12.3 percent decline compared with 2.6 million homes in October 2011.
CoreLogic CEO Anand Nallathambi said in a statement that shadow inventory continues to shrink from peak levels in terms of both the number of units and dollars represented.
“We expect a gradual and progressive contraction in the shadow inventory in 2013 as investors continue to snap up foreclosed and REO properties and the broader recovery in housing market fundamentals takes hold,” Nallathambi said.
Collectively, these and other trends suggest better market conditions for sellers than has been the case in recent years, yet greater challenges for buyers looking for low-priced properties.