A total of 247 metropolitan areas across 49 states and the District of Columbia qualified for inclusion on the National Association of Home Builders/First American Improving Markets Index (IMI) for August. 

While this number of improving home markets is down eight metros from the list’s previous reporting in July, NAHB notes that August’s reading is approximately three times higher than it was a year ago.

The IMI identifies metro areas that have shown improvement from their respective troughs in housing permits, employment and house prices for at least six consecutive months. 

Three new markets were added to the list in August, while 11 were dropped. Newly added metros include Kankakee, Illinois, along with Atlantic City and Ocean City in New Jersey. 

The 244 metros listed as “improving” in July maintained that same status in August, which some believe is an encouraging sign that the market’s recovery has taken hold and continues to progress. 

“Even with the small decline in the IMI this month, close to 70 percent of all U.S. metros are represented, and the geographic distribution of entrants continues to be very widespread,” said Kurt Pfotenhauer, vice chairman of First American Title Insurance Company. “These facts should be reassuring to today’s prospective home buyers.”

The IMI is designed to track housing markets across the country that are showing signs of improving economic health. To determine whether a market is “improving,” the IMI measures three sets of independent monthly data to get a mark on the top Metropolitan Statistical Areas. 

The three indicators that are analyzed are employment growth from the Bureau of Labor Statistics, house price appreciation from Freddie Mac and single-family housing permit growth from the U.S. Census Bureau. 

Metros must see improvement in all three measures for at least six consecutive months following those measures’ respective troughs before they can be included on the improving markets list, notes NAHB.

Written by Jason Oliva