U.S. housing markets continue to stabilize

The U.S. housing market hasn’t sputtered in recent months and continues to slowly stabilize, marking the best year for home sales since 2007, a new report from mortgage giant Freddie Mac highlights. And two new housing markets – Scranton and Harrisburg, Penn. – have entered their outer range of stable housing activity.

Freddie Mac released its Multi-Indicator Market Index (MiMi) report on Friday, Oct. 23, 2015, which shows that U.S. housing markets, on average, are more stable than they were a year ago. On a year-over-year basis, the national MiMi value has improved more than 6 percent. Since its all-time low in October 2010, the national MiMi has rebounded 37 percent, but remains significantly off from its high in 2007.

MiMi combines 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.

On a scale of 0-200, Freddie Mac, the largest government-sponsored buyer of mortgage-backed securities, assigns a numerical value to the stability of U.S. housing markets. It 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.

"The nation's housing market continues to improve, riding the wave of the best year in home sales since 2007,” Freddie Mac Deputy Chief Economist Len Kiefer said. “With the MiMi purchase applications indicator at its highest level in more than seven years, we expect home sales to remain strong. Low mortgage rates are fueling the recovery across the country. Places like Denver, Austin and Salt Lake City, and most markets in California, are seeing robust home purchase demand and in many cases double-digit growth over last year."

Twenty-nine of the 50 states plus the District of Columbia have MiMi values in a stable range, with North Dakota (96.9), District of Columbia (103.9), Hawaii (93.5), Montana (93.2), and Utah (90.3) ranking in the top five. A value above 80 is considered stable. Forty-seven of the 100 metro markets have MiMi values in a stable range, with Fresno (99.4), Austin (96.6), Honolulu (94.1), Salt Lake City (93.3) and Los Angeles (93) ranking in the top five.

The most improving states month-over-month were Ohio (+1.30%), South Carolina (+1.20%), New Jersey (+0.97%), Colorado (+0.92%) and Georgia (+0.83%). On a year-over-year basis, the most improving states were Florida (+14.07%), Oregon (+12.02%), Nevada (11.75%), Colorado (+11.28%), and Washington (+10.41%).

"Buoyed by strong employment growth, housing supply is struggling to keep pace with demand, which is driving house prices higher,” said Kiefer. “Fortunately, low mortgage interest rates are helping to keep homebuying affordable for some prospective homebuyers. Nationwide, housing markets are getting back to their long term benchmark averages, but they still have room for improvement. We're expecting housing to sustain its momentum going into yearend, but we're going to need stronger income growth to carry housing throughout 2016."

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Published Oct. 23, 2015

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