The FINANCIAL -- Freddie Mac on May 27 released its updated Multi-Indicator Market Index (MiMi) showing the U.S. housing market continuing to stabilize with the most improving metro markets seeing stronger demand for home sales this spring homebuying season. Despite strong house price appreciation, low mortgage rates are keeping payment-to-incomes affordable for the typical family in most markets.
The national MiMi value stands at 75.4, indicating a weak housing market overall but showing an improvement (+0.69%) from February to March and a three-month improvement of (+1.24%). On a year-over-year basis, the national MiMi value has improved (+3.11%). The nation's all-time MiMi high of 121.7 was April 2006; its low was 57.4 in October 2010, when the housing market was at its weakest. Since that time, the national MiMi value has made a 31.3 percent rebound.
Seventeen of the 50 states plus the District of Columbia have MiMi values in a stable range, with North Dakota (95.8), the District of Columbia (95.6), Hawaii (90.5), Montana (90), and Wyoming (85.7) ranking in the top five.
Twenty-five of the 100 metro areas have MiMi values in a stable range, with Honolulu (91.8), Fresno (90.5), Austin (88.8), Los Angeles (86.8) and McAllen, TX (86.4) ranking in the top five.
The most improving states month-over-month were Washington (+2.37%), Oregon (+2.26%), Arizona (+1.76%), Tennessee (+1.39%) and Michigan (+1.26%). On a year-over-year basis, the most improving states were Nevada (+9.87%), Oregon (+9.86%), Colorado (9.34%), Florida (+8.23%), and Michigan (+7.60%).
The most improving metro areas month-over-month were Portland (+2.68%), Riverside (+2.22%), San Jose (+2.13%), Nashville (+2.10%) and Baton Rouge (+1.99%). On a year-over-year basis, the most improving metro areas were Stockton (+12.01%), Detroit (+11.63%), Denver (+11.41%), Las Vegas (+10.73%), and Palm Bay, FL (+10.23%).
In March, 36 of the 50 states and 77 of the 100 metros were showing an improving three month trend. The same time last year, 40 states plus the District of Columbia, and 82 of the top 100 metro areas were showing an improving three-month trend.
Quote attributable to Freddie Mac Deputy Chief Economist Len Kiefer:
"The nation's housing markets are getting back on track. Better employment prospects, rising home values and increased purchase activity are all driving improvements in housing markets across the country. In this month's MiMi three more states and seven metro areas moved within range of their benchmark level of activity. However, as we've mentioned before, we're likely to see bouts of affordability shock with mortgage rate swings for the remainder of this year as market participants try to anticipate Fed timing around rising short term interest rates and expectations for global growth wax and wane."
"The West and Southwest areas of the country are showing some of the strongest housing activity, especially markets like Portland, Denver, Dallas, San Jose and Los Angeles. Many markets in the South and Midwest, while improving, are still plagued by high rates of mortgage delinquencies, which are holding back these markets from recovering faster. The exception to this would be the Nashville-area market. It more closely resembles the housing markets in the West, such as those in Utah. These markets are experiencing double-digit annual growth rates in purchase applications and showing some of the strongest homebuying demand in the country."
MiMi monitors and measures the stability of the nation's housing market, as well as the housing markets of all 50 states, the District of Columbia, and the top 100 metro markets. MiMi combines proprietary Freddie Mac data with current local market data to assess where each single-family housing market is relative to its own long-term stable range by looking at home purchase applications, payment-to-income ratios (changes in home purchasing power based on house prices, mortgage rates and household income), proportion of on-time mortgage payments in each market, and the local employment picture. The four indicators are combined to create a composite MiMi value for each market. Monthly, MiMi uses this data to show, at a glance, where each market stands relative to its own stable range of housing activity. MiMi also indicates how each market is trending, whether it is moving closer to, or further away from, its stable range. A market can fall outside its stable range by being too weak to generate enough demand for a well-balanced housing market or by overheating to an unsustainable level of activity.