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The National Association of Home Builders added Houston to a list of 84 markets across the nation showing measurable and sustained improvement in their housing market.
Houston was one of several cities added to NAHB's American Improving Markets Index.
The index identifies metropolitan areas that have shown improvement from their troughs in housing permits, employment and house prices for at least six consecutive months.
"The thing that got them on the list finally was the house prices," said David Crowe, chief economist for the NAHB. "They had sufficient growth in permits and employment to have made the list, but the list requires growth in all three."
Houston's housing permits have grown 1.4% since its bottom in April of 2009, home prices have increased 2.4% since September 2011. The city's May unemployment rate was 6.9%, according to the Bureau of Labor Statistics.
Danny Frank, chairman-elect of the Houston Association of Realtors, said the Houston housing market is "on fire."
In May, sales of pre-existing single-family homes rose 23.8% from one year earlier, marking the biggest monthly increase since August 2011.
Along with strong sales came record prices. Strong activity for homes priced at $250,000 or more drove both average and median sales prices to historic levels, rising 8.5% to $237,083 and 7.1% to $168,000, respectively.
"We've never really had a bubble in Houston, and now our inventory levels are at an all-time low," said Frank, calling the inventory — which sits at about five months — "a definite sellers' market."
At the same time, the metro's job market is improving.
"Economics 101 takes effect," he said. "You have fewer houses for sale and more jobs, so more people want fewer houses and the prices go up."
As for the slow growth in prices, Frank attributes that to a largely stable market.
"Our prices never really went down either," he said. "We've just been dead flat."
While he admits that the improvement in Houston is localized and some neighborhoods are doing better than others, he expects the improvement to continue in the long term given the stable job market and desirable location.
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