Freddie Mac: Housing Market Remained ‘Weak’ In July

Posted by Patrick Barnard on September 24, 2014 No Comments
Categories : Residential Mortgage

Just how weak is the housing market?

According to Freddie Mac's Multi-Indicator Market Index (MiMi), the housing market is 22.7% ‘recovered’ from its weakest period in September 2011 – which means it is still pretty weak.

The recently expanded index measures the overall strength of the housing market based on four main indicators: purchase applications, payment-to-income ratios, percent of borrowers current on their mortgage, and employment.

As of July, the index had a score of 73.4, indicating a weak housing market overall. This represents a 0.45% decline from June and a 0.98% decline from April.

Thirteen of the 50 states, plus the District of Columbia, had MiMi values in a stable range, with North Dakota (95.9), the District of Columbia (94.4), Wyoming (91.3), Montana (89.5) and Alaska (88.4) ranking in the top five.

Six of the 50 metro areas tracked had MiMi values in a stable range, with San Antonio (91.3), Austin (87.5), New Orleans (83.9), Salt Lake City (83.6) and Houston (83.5) ranking in the top five.

States that saw the biggest month-over-month increase in their MiMi score for July included Illinois (up 0.92%), Rhode Island (up 0.72%), Washington (up 0.53%), Nevada (up 0.38%) and Florida (up 0.31%).

States that saw the biggest improvement on a year-over-year basis included Nevada (up 20.51%), Illinois (up 12.16%), Florida (up 11.75%), California (up 9.15%) and South Carolina (up 8.01%).

Metropolitan areas that saw the biggest month-over-month improvement included Miami (up 0.88%); Chicago (up 0.64%); Las Vegas (up 0.62%); Providence, R.I. (up 0.56%); and Seattle (up 0.27%).

Cities that saw the biggest improvement in a year-over-year basis included Las Vegas (up 23.35%); Riverside, Calif. (up 14.97%); Chicago (up 14.73%); Miami (up 13.70%); and Orlando, Fla. (up 11.93%).

‘We will continue to see 'two steps forward and one step backward' movement in our housing stability index until the broader economy sees better growth, labor markets tighten further and household formations pick-up to bring more first-time and move-up buyers into the market,’ says Frank Nothaft, chief economist for Freddie Mac, in a release. ‘The good news is overall the housing market continues to improve and is up five percent on a yearly basis in the latest MiMi reading.

‘We didn't notice a large decline in any one market this month, but more of softening across the board,’ he adds. ‘Even the MiMi top-ranked state and metro markets all saw a slight decline, except for Austin. But the real drag on the most market's housing recovery continues to be the lack of purchase application activity.

‘Even the hot housing markets in the Northwest, which are back in their stable range of housing activity, are seeing their purchase application activity slow,’ Nothaft continues. ‘The one area where momentum hasn't slowed is among the hardest-hit markets. Places like Las Vegas, Miami, Chicago and Riverside, among others, are still showing double-digit yearly improvements, but that's largely a reflection of significant gains in the local employment picture as well as a real improvement in borrowers making timely mortgage payments.’

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