The Leading Markets Index (LMI) is a quarterly measurement of building conditions across the country. The LMI was originally developed to measure housing recovery conditions after the Great Recession.
The LMI was recently modified to utilize building permit data to provide benchmarks of housing construction growth in various submarkets. The index also includes a headline indicator that tracks the state of single-family and multifamily construction relative to historical norms. Each quarter a new economic geography measure is added to the index.
The headline indicator of the new LMI, the count of building permits, helps illustrate residential construction’s current production levels. The index is measured as the population adjusted level of permits, benchmarked against 2001 production levels. The population adjustment modifies the benchmark amount of production necessary to keep up with a changing number of households.
National Permit Levels of Single-Family and Multifamily
As of the third quarter of 2018, single-family permit activity, adjusted for population, registered at 59% of the 2001 first quarter level. This was a modest increase compared to the second quarter 2018 where the single-family permit activity was at 58% of the 2001 first quarter level.
Additionally, multifamily permit activity, adjusted for population was at 98% of the first quarter of 2001 level. However, compared to the 2018 second quarter level, this was a slight decline since it was at 99% of the first quarter of 2001 level.
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Regional Building Growth Conditions
NAHB classified all counties in the U.S. as one of seven regional categories. For each area, NAHB tracks single-family and multifamily growth rates and market shares. These categories include: