Johnson City MSA retains top national ranking on economic, housing market index

Johnson City retained its ranking among top markets in the nation based on economic and housing activity. The ranking is based on the National Association of Home Builders/First American Leading Markets Index (LMI) released this week.

March was the first time in a year the Johnson City overall score on the index moved lower. That was driven by a decrease in both the permits and home price components of the index. The employment component of the index remained unchanged, but it is the weakest of the three. The Tri-Cities saw it’s worst employment losses in the fourth quarter since 2009. Johnson City has been hit especially hard in that softening jobs economy.

Nationwide 59 out the 350 metro areas tracked by the index returned to or exceeded their last normal levels of economic and housing activity. This represents a net gain of one from the previous month.

The index’s nationwide score held steady at .87. This means that based on current permits, prices and employment data, the nationwide average is running at 87 percent of normal economic and housing activity.

The Kingsport-Bristol index was .89 in March. It was last at normal economic and housing activity in March 2008. March was the ninth straight month the overall index has been above its 2013 low in June.

Johnson City has consistently performed above its normal indexed level since July 2003.

Thirty-two percent of U.S. metro areas saw their score rise this month and 84 percent have shown an improvement over the past year.

“Despite the cold weather that has constrained economic and housing activity across much of the nation this winter, markets are returning to normal levels,” said NAHB Chairman Kevin Kelly. “As the job and housing markets continue to mend and the onset of spring releases the pent-up demand for new homes, this will bode well for the remainder of 2014.”

“The number of markets on this month’s LMI at or above 90 percent of previous norms has climbed to 130 – a positive trend to watch as the year progresses,” 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.

Here’s how the Tennessee MSA indexes looked in March.

Johnson City 1.31

Clarksville – 1.0

Nashville – 0.95

Cleveland – 0.91

Knoxville – 0.89

Kingsport – 0.89

Chattanooga – 0.85

Morristown – 0.79

Jackson – 0.77

Memphis – 0.75

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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