Despite the fact that mortgage rates remain near historic lows, home price appreciation is stabilizing, delinquencies are dropping and the national unemployment rate is improving, the housing market remains ‘weak,’ according to Freddie Mac's new Multi-Indicator Market Index (MiMi).
The index, which was introduced in May, measures the overall strength of the housing market based on four indicators: purchase applications, payment-to-income ratios, percent of borrowers current on their mortgage and employment.
This month's MiMi report shows that the U.S. housing market was basically flat in April compared to March. There was a slight improvement of about 0.05 points, bringing the index to -3.01, indicating a ‘weak’ housing market overall.
However, on a year-over-year basis, the housing market has improved by 0.65 index points.
The nation's all-time MiMi low of -4.49 was in November 2010.
States that saw the biggest month-over-month improvement in their housing markets include Illinois (+0.12), Nevada (+0.12) and Tennessee (+0.12), with Ohio, Rhode Island and Texas all tied (+0.09).
States that saw the biggest year-over-year improvement include Florida (+1.73), Nevada (+1.52), Texas (+0.98), South Carolina (+0.95) and California (+0.89). Texas moved up to the third-most improving state from fifth place.
Cities that saw the biggest month-over-month improvement include Las Vegas (+0.13); Providence, R.I. (+0.13); Buffalo, N.Y. (+0.12); and Chicago (+0.11), while Houston, Memphis and Nashville, Tenn., and San Antonio all tied (+0.10).
Cities that saw the biggest year-over-year improvement include Miami, Fla. (+2.25); Orlando, Fla. (+1.75); Las Vegas (+1.60); Tampa, Fla. (+1.46); and Riverside, Calif. (+1.31).
The index clearly demonstrates that the housing recovery has stalled in most areas of the country: In April, 14 of the 50 states and 21 of the 50 metros showed an improving three-month trend. However, in April 2013, 42 states plus the District of Columbia and 44 metros were showing an improving three-month trend.
Frank Nothaft, chief economist for Freddie Mac, notes that while the index shows ‘very slow improvement â�¦ with most markets still trying to move beyond stall speed â�¦ the local jobs picture [is] getting better, and seriously delinquent rates [continue] to come down.’
‘Both indicators are critical to decreasing distress in local markets, but that's also putting more pressure on markets with thinning inventory, especially where short sales have fallen off dramatically,’ he adds. ‘However, as you look at each of the individual markets MiMi tracks, they have their own unique dynamics and show housing markets recovering at different paces.’
Texas, for example, ‘is clearly a standout, with three of its metros claiming the top five MiMi spots,’ Nothaft says.
‘However, states like South Carolina, Rhode Island and Ohio have showed marked improvement since just the beginning of the year,’ he adds. ‘In fact, those metro areas that are closest to joining the handful of markets that have already achieved their stable range of housing activity are Pittsburgh and Oklahoma City, as is the state of Oklahoma.’
Nothaft says, ‘Solid jobs gains, attractive mortgage rates and good affordability will help this trend spread to even more markets. However, income growth and greater inventory is just as important if we're going to sustain any type of meaningful housing recovery.’
To view the full report with chart, click here.