Johnson City Leading Markets Index drops but still in top 10 – Kingsport-Bristol up by one


Jan Tenn Johnson City dropped two places in January but remains in the top 10 on an index modeled to measure economic and housing market performance.

According to the current National Association of Home Builders/First American Leading Markets Index (LMI) the Johnson City MSA’s ranked 9th in the nation.

Johnson City’s ranking dropped from 7 because the three components used in the index were unchanged from December while other MSAs improved.

The Kingsport-Bristol MSA increased its ranking by one place to 137.

Johnson City’s overall index plateaued in January after increase for six months.

Kingsport-Bristol’s overall index has also trended higher but at a slower pace.

New residential permits are driving Johnson City’s overall index and ranking.

The price and employment components in Kingsport-Bristol are stronger than Johnson City’s. But Kingsport-Bristol’s lack luster permits index is holding it back.

Both Tri-Cities’ MSA are rated as outperforming the national overall index. The performance of all  the NE Tennessee MSAs – with the exception of Morristown – is ranked better than the national rate.

Markets in 56 out of the approximately 350 metro areas nationwide returned to or exceeded their last normal levels of economic and housing activity in January.

This represents a net gain of two from the previous month. The index’s nationwide score of .86 indicates that, based on current permits, prices and employment data, the nationwide average is running at 86 percent of normal economic and housing activity.

“More markets are slowly returning to normal levels and we expect this upward trend to continue as an improving economy and pent-up demand brings more home buyers back into the marketplace,” said NAHB Chairman Rick Judson. “Policymakers must be careful to avoid actions that would harm consumer confidence and impede the ongoing recovery.”

“Forty-five percent of metro areas are recovering at a faster pace than the nation as a whole, with smaller markets leading the way,” said NAHB Chief Economist David Crowe. “Of the 56 markets that are at or above normal levels, 48 of them have populations that are less than 500,000.”

“More than 35 percent of all the markets on this month’s LMI are operating at a capacity of 90 percent or better of previous norms, which is a good sign that the housing recovery will continue to pick up steam in 2014,” said Kurt Pfotenhauer, vice chairman of First American Title Insurance Co., which co-sponsors the LMI report.

The LMI shifts the focus from identifying markets that have recently begun to recover, which was the aim of a previous gauge known as the Improving Markets Index, to identifying those areas that are now approaching and exceeding their previous normal levels of economic and housing activity. More than 350 metro areas are scored by taking their average permit, price and employment levels for the past 12 months and dividing each by their annual average over the last period of normal growth. For single-family permits and home prices, 2000-2003 is used as the last normal period, and for employment, 2007 is the base comparison. The three components are then averaged to provide an overall score for each market; a national score is calculated based on national measures of the three metrics. An index value above one indicates that a market has advanced beyond its previous normal level of economic activity.

Editor’s Note: 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.

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