Sure, the stronger employment numbers of late and the well-developed home price recovery haven't translated to any meaningful improvements in building permits, but that's an easy fix with the NAHB's Leading Markets Index (LMI)!   The LMI factors in not only single family construction permits,  but also home prices, and employment to determine how various housing markets are faring compared to historical norms. 

Fifty-six metropolitan areas were designated as Leading Markets in the latest review conducted by the National Association of Home Builders (NAHB)/First American Title.  This means that those areas have returned to or exceeded their last normal levels of economic and housing activity (considered to be 2000-2003).  One year earlier there were 49 leading markets designated.

The Leading Market Index for the nation as a whole was scored at .89. This means that the country is on average running at 89 percent of normal economic and housing activity.  Seventy-nine of the 350 metropolitan areas tracked by the Index have shown year-over-year improvements.  

Permitting data comes from the U.S. Census Bureau/Department of Housing and Urban Development and home price information from Freddie Mac.  Employment data from the Bureau of Labor Statistics is compared to 2007 as the base year.  The three components are then averaged to provide an overall score for each market and 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.

NAHB Chief Economist David Crowe said that single family permits are the lagging component of the index, reaching only 43 percent of normal on a national level. "The big bright spot is employment, where the number of metro areas having reached or exceeded their norms grew from 26 to 46 in a year," he said.

Baton Rouge continues to top the major market LMI with a score of 1.39 - or 39 percent better than its last normal market level. Other large metros leading the list include Honolulu, Oklahoma City, Houston, and Austin.

"In the 22 metros where permits are at or above normal, the overall index indicates that these markets have fully recovered," said Kurt Pfotenhauer, vice chairman of First American Title Insurance Company.  "This finding shows the impact that an uptick in permits can have on the overall health of markets."

Among smaller metros, both Odessa and Midland, Texas, boast LMI scores of 2.0 or better, meaning their markets are now at double their strength prior to the recession.  Also scoring well among smaller cities are both Bismarck and Grand Forks, North Dakota and Casper, Wyoming.