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© 2018 Copyright Key Media and Research All rights reserved. 
No reproduction of any type without expressed written permission.

10
Door & Window Market www.dwmmag.com
W
hile the economic recovery
is in full swing, the Leading
Markets Index (LMI) pub
-
lished by the National Association of
Home Builders (NAHB) shows that
cities and regions in the country have
participated in it to varying degrees.
The LMI highlights the extent to
which a given market has approached
or exceeded its economic progress
prior to the recession. The comparison
timeframe is from 2000 to 2003, which
is considered the last normal period for
housing. The LMI weighs key measures
of the health of the residential seg
-
ment: single-family building permits,
home prices and employment levels.
It is important to note that this data
was collected prior to the full impact of
the unusually active hurricane season.
Also, none of this should be taken to
indicate that one region is attractive,
while another is unattractive. Rather,
it indicates the extent to which the
region in which a company operates is
providing a supportive tail wind.
The chart here shows the aver
-
age LMI score across six regions of
the United States. Ranked by overall
regional average LMI scores, there was
little change from Q3 2016 to Q3 2017
among the various regions. The South
Central region was the highest-ranked
region in both periods, and its average
LMI score improved by 3.4 percent in
the past year. The West region, with its
7.8 percent improvement to an aver
-
age LMI score of 1.11, surpassed the
Mountain region (LMI of 1.09) during
the same period. This was despite
the fact that the Mountain region
posted a respectable 5.8-percent
improvement in the trailing year. The
remaining regions, by order of highest
average LMI score and their score
improvement in the past year, were
the Southeast (6 percent), Northeast
(3 percent) and Midwest (2.1 percent).
All regions showed improvement in
their average LMI scores in the past
year.
The most recovered single city in
the nation is Odessa, Texas. Its score of
2.25 indicates that the city has recov
-
ered to 225 percent of its pre-recession
performance. By contrast, the least
recovered city in the U.S. is Rockford,
Ill., whose LMI score of .67 indicates
that it is only two-thirds of the way
back to its pre-recession level.
It is interesting for door and win
-
dow manufacturers to compare the
LMI scores for their own city (all scores
are available for download at www.
nahb.org) with the scores for all cities
broken down by quintiles. In this way,
manufacturers can assess the relative
strength and performance of the cities
they serve, versus the level of recovery
of cities across the country.
The median LMI score of all 337
cities for which data was available as
of Q3 2017 was 1.03, which is the same
as the LMI score for the United States
as a whole. This means that half of the
cities in the country are still less recov
-
ered than the country as a whole. Of all
U.S. cities with LMI scores, roughly 40
percent have a score less than 1, while
roughly 60 percent have a score over 1.
If the market were overheated or exhib
-
iting bubble-like characteristics, we
would expect fewer cities to have fallen
short of their pre-recession levels.
The breadth of cities that have yet
to fully recover provides support for
the widely held belief that the market
still has several more years of attractive
growth in front of it.
y
Michael Collins is an investment banker
and a partner in Building Industry Advisors.
He specializes in mergers and acquisitions in
the door and window industry.
T R E N D T R A C K E R
mcollins@buildingia.com
Follow the Money
Find the U.S. Regions With Strong Local Economies
BY MICHAEL COLLINS
Region Q3 LMI
2017
% Change from
Q3 LMI 2016
United States 1.03 +5.1%
West 1.11 +7.8%
Southeast 1.06 +6.0%
Mountain 1.09 +5.8%
South Central 1.20 +3.4%
Northeast 1.02 +3.0%
Midwest 0.98 +2.1%
LMI Scores by Region
Source: NAHB

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© 2018 Copyright Key Media and Research All rights reserved. 
No reproduction of any type without expressed written permission.