Rankings: The 2011 Builder Market Health Index

"Oxymoron" may be the first word that comes to mind when the terms "health" and "home building" are used in the same sentence.

While the home building industry may still be suffering from a withdrawal of activity, many of the economic forces that typically drive new home demand have turned positive in some of the large home building markets in the United States. If only that were enough to get potential buyers off the fence and to the closing table.

Unfortunately, many of these drivers—household formations and job growth, to name two—have been trumped by an excess of resale inventory and falling home prices. Though their family finances have improved, many potential home buyers are no doubt waiting for home prices to stop falling before they make a move. Many people who decide to buy prefer to hunt for bargains in foreclosures and short sales.

The Builder Market Health Index, computed by Hanley Wood Market Intelligence, weighs housing conditions in the 100 largest home building markets based on the 2011 outlook for six key variables correlated most closely to strong home sales: unemployment rate, change in unemployment numbers, home price appreciation, household growth, job growth, and median income growth. The 2011 forecasts come from Moody’s Economy.com.

In years past, few markets managed to score better than 50 on this index, the minimum to even be considered healthy. This year about half scored 50 or better, largely because of improving job prospects and rising incomes. But there were no "As" on this report card. The top four markets (Raleigh, Austin, Durham, and Huntsville) only received a "B," a score of 80 or more. "Cs," "Ds," and "Fs" were far more common.

The color-coded map demonstrates that conditions are best (denoted by red and orange blocks) in the South, which accounts for 16 of the top 20 markets on the list. Markets in Texas and the Carolinas dominate the leader board. But some Midwestern markets, where prices stayed in check during the housing boom, also receive above-average marks.

The weakest housing markets are concentrated in the Rust Belt, extending into the northern reaches of New York. Many of these housing markets continue to suffer job losses; and some (such as Cleveland) from the double-whammy of a population exodus. Read on and find out where your market ranks by health on the list of the 100 largest housing markets.

Learn more about markets featured in this article: Atlanta, GA, Little Rock, AR, Los Angeles, CA, Myrtle Beach, SC, Eugene, OR, Dallas, TX, Charleston, SC.