Freddie Mac’s New Index Shows Housing Market Was ‘Weak’ In Q1

Posted by Patrick Barnard on May 29, 2014 No Comments
Categories : Residential Mortgage

Freddie Mac has a new index that 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.

The new Multi-Indicator Market Index (MiMi) shows that the U.S. housing market was basically flat in April compared to March and was basically stalled for the entire first quarter.

Still, some markets are improving – mostly the ones in the country's midsection.

‘Less than half of the housing markets MiMi covers are showing an improving trend, whereas at the same time last year, more than 90 percent of these same markets were headed in the right direction,’ says Frank Nothaft, chief economist for Freddie Mac, in a release. ‘We're hopeful that many of these markets that have stalled will start moving again now that mortgage rates have eased over the past month and the spring home buying season is upon us. House price gains are a double-edged sword at this stage of the recovery. They help those hard-hit markets where prices are still low and many homeowners are underwater, but in areas where supply is constrained, they're creating an imbalance and pricing out many first-time home buyers.’

The index currently stands at about -3.06 points, indicating a weak housing market overall with only a slight improvement (+0.03 points) from February to March.

However, on a year-over-year basis, the U.S. housing market has improved by 0.66 points. The nation's all-time MiMi low of -4.49 was in November 2010 when the housing market was at its weakest, according to the report.

Ten of the 50 states, plus the District of Columbia, are in the ‘stable’ range in April, according to the report, with North Dakota, Wyoming, the District of Columbia, Alaska, and Louisiana ranking in the top five.

States that saw the largest month-over-month improvement in April are Ohio (+0.12), Rhode Island (+0.11), Illinois (+0.10), Texas (+0.10) and South Carolina (+0.09). States with the biggest year-over-year improvement include Florida (+1.83), Nevada (+1.60), South Carolina (+0.99), California (+0.97) and Texas (+0.96).

Metro areas that saw the biggest improvement, month-over-month, are Cincinnati (+0.11); Columbus, Ohio (+0.11); Houston (+0.10); Riverside, Calif. (+0.10); and San Antonio, Texas (+0.10). Metro areas that saw the biggest year over year improvement include Miami, Fla. (+2.37); Orlando, Fla. (+1.91); Las Vegas (+1.71); Tampa, Fla. (+1.57); and Riverside, Calif. (+1.44).

As of the end of March, 13 of 50 states, plus the District of Columbia, were improving based on their three-month trend, and 20 of the 50 metros show an improving trend.

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