Housing Markets Improving But Most Metros Not Yet ‘Stable’

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Housing markets in half of all states and 35 of the top 50 metros are improving, according to a new report from Freddie Mac. However, only 11 states and four of the top 50 metros are “stable” compared to each market’s individual historical norms, Freddie Mac reported.

Freddie Mac’s first Multi-Indicator Market Index (MiMi) was released for the first time Wednesday. The index compares current levels of purchase applications, payment-to-income ratios, the proportion of on-time mortgage payments, and employment and compares them with long-term averages from the past. Both too little or too much activity take a market out of the stable range, according to the MiMi.

“In many markets a better employment picture, along with some income growth, makes it possible for more people who are considering buying a home to stay within reasonable payment-to-income ratios on their monthly mortgages,” said Len Kiefer, Freddie Mac’s deputy chief economist.

While only four metros are stable, Kiefer said, “As we enter the spring homebuying season, we hope to see recent trends continue with more markets moving closer to their long-term stable range.”

States in the stable range include North Dakota, the District of Columbia, Wyoming, Alaska, Louisiana, Montana, West Virginia, Hawaii, Texas, South Dakota, and Vermont.

Metros in the stable range include San Antonio, Texas; Houston, Texas; Austin, Texas; and New Orleans.

As of January, states where the housing market improved the most over the year include Florida, Nevada, California, Texas, and the District of Columbia.

Top-improving metros over the year include Miami; Orlando; Riverside; California; Las Vegas; and Tampa, Florida.

With a value of 0 as “stable,” the national housing market sits at -3.08 in January. However, the market has improved from both a month ago and a year ago, according to the MiMi. Also, this compares to an all-time low of -4.49 in November 2010.

Commenting on the relevance of the new index, Freddie Mac’s chief economist, Frank Nothaft said, “With recent history demonstrating that housing activity differs substantially from market to market, MiMi offers a fresh perspective on housing at the local level just as we are entering this new purchase market landscape.”

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