About 18 percent of the largest 360 metro areas in the country have returned to or exceeded their last normal levels of economic and housing activity in the first quarter, according to the National Association of Home Builders/First American Leading Markets Index. The index showed a slight year-over-year gain of seven more metros to the improving list, now totaling 68 metros in the first quarter.

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The index identifies areas that are now approaching or exceeding their previous normal levels of economic and housing activity. Researchers compare average permits, home prices, and employment levels for the past 12 months to the metros' annual average over the last period of normal growth.

"The markets are continuing to make gains," says NAHB Chairman Tom Woods. "A strengthening economy and low interest rates should spur the release of pent-up demand and keep housing moving forward this year."

Topping the index of major markets continues to be Baton Rouge, La., which is performing 43 better than its last normal market level. Other major metros performing ahead of their last normal levels include Austin, Texas; Honolulu; Houston; Oklahoma City; San Jose, Calif.; Los Angeles; Salt Lake City; Charleston, S.C.; and Nashville, Tenn.

"The strongest gain is employment, where the number of metros that reached or surpassed their norms nearly doubled in a year," says NAHB Chief Economist David Crowe. "Despite a minor uptick in single-family permits, only 7 percent of the markets are at or above their normal permit activity."

Among smaller metros, Midland and Odessa, Texas, top the list, with both their markets performing at double their strength prior to the recession, according to the index. Other small-town strong performers: Manhattan, Kan.; Grand Forks, N.D; and Casper, Wyo.

Source: NAHB