5. Gulfport-Biloxi, MS

Market Health Indicator: 78.1

2011 Building Permit Forecast: 1,783 

Percent Change in Building Permits: -4%

Things are looking up in Gulfport-Biloxi, a region that was ravaged in 2005 by Hurricane Katrina. Though fewer households live here now (92,300) than in 2004, Moody's anticipates strong growth, 3.24%, this year. That will be coupled with a large, 4.52% increase in median incomes, which have stagnated at roughly $38,300, well below the national average.

Unemployment here is also below the national average. Gaming and tourism are the major industries, though nearly a quarter of the jobs here are in government. Keesler Air Force Base is a big employer.

Housing in Biloxi is inexpensive, with a median price of $122,450 last year. Home prices, down from a peak of $154,400 in 2007, appear to have bottomed out. Moody's is calling for an increase next year. Permit levels, which got as high as 5,400 in 2007, are expected to remain in the vicinity of 1,800 this year, before rising strongly in 2012.

Visit our Local Markets page for Gulfport to see more data and analysis. 

4. Huntsville, AL

Market Health Indicator: 80.3

2011 Building Permit Forecast: 4,283

Percent Change in Building Permits: 55%

A strong military presence here contributes to an unemployment rate of roughly 7%, well below the national average. Nicknamed "Rocket City," Huntsville is home to the Marshall Space Flight Center. Many of the region's private employers are engaged in the aerospace and defense industries.

The 2005 Base Realignment and Closure Act (BRAC) caused a big population influx and kept income trends steady. The stimulus will be felt again this year, when the Army Materiel Command opens a new headquarters that's expected to add 1,354 jobs. All told, the region is expected to add another 3,460 jobs this year.

Household growth is stronger than any other top 100 market in the country. Huntsville is a very affordable place to live, with a median home price of $123,000 in 2010, down only $7,000 from the peak. Median prices fell slightly last year after existing home sales fell 8.5%. But building permits rose for the first time in four years. They were up 10.7% over the previous year, with single-family accounting for a full 92% of the action.

Visit our Local Markets page for Huntsville to see more data and analysis. 

3. Durham-Chapel Hill, NC

Market Health Indicator: 81.5

2011 Building Permit Forecast: 3,250

Percent Change in Building Permits: 70%

Thanks to a strong base of employment in higher education and research, the median income in Durham will rise to 4.36% this year, faster than in any of the other top 20 markets. Durham added another 4,100 jobs last year to reach 287,300, dropping its unemployment rate below 7.5%. With a repeat performance in 2011, it will climb above 2007 employment levels. 

The housing market here appears to have recovered, if it ever really suffered. Existing home prices rose 3% in 2010, to $178,000, even as sales fell 6% in the Triangle area, according to the local Realtors association. Home prices have barely fallen--they only got as high as $180,000 in 2007.

The permit situation is stacking up as a tale of two industries. Single family permits rose 60% last year. But a sharp fall off in apartment permits kept the overall total in the minus category. Moody's is calling for a reversal this year, with total building permits rising by 70%.

Visit our Local Markets page for Durham to see more data and analysis.  

2. Austin-Round Rock, TX

Market Health Indicator: 86.5

2011 Building Permit Forecast: 11,079

Percent Change in Building Permits: 57%

Though Austin was knocked from the top spot on this year's list, its housing fundamentals continued to show solid improvement. The metro area enjoys some of the strongest job growth in the nation. Employment accelerated last year with the addition of 18,700 more jobs, most of them in service industries, lowering the unemployment rate to 7%. Google recently fanned the employment flames by announcing it wants to open a division there dedicated to location-based marketing and mobile recommendations.

Austin has grown to become the 15th largest city in the nation, according to the U.S. Census Bureau. Its strong fundamentals have attracted the interest of apartment owners and developers: MPF Research forecasts that it will be the second best apartment performer this year.

Median incomes rose 3% last year. Median home prices in Austin rose right through the economic recession, eking out a 1% gain last year to $195,000. 

Visit our Local Markets page for Austin to see more data and analysis.  

1. Raleigh-Cary, NC

Market Health Indicator: 86.9

2011 Building Permit Forecast: 9,604

Percent Change in Building Permits: 90%

Raleigh builders sense that their market may be in for something big--building permits increased 85% last year to 8,600, with much of the strength on the multifamily side. But single-family permits increased as well as builders took stock of improving market conditions.

The market was hot enough that existing home prices rose 4% in 2010, though they are expected to fall 10% this year due to a spreading foreclosure problem. But excess inventory may be absorbed quickly, because households are still moving in large numbers to Raleigh, drawn by its temperate climate and good employment prospects.

Raleigh continued to add jobs last year, especially in services, lowering its unemployment rate to 8.4%. This is an affordable place to live, and it recently ranked among the best places to retire.

Visit our Local Markets page for Raleigh to see more data and analysis.