Seasonal Stumble in Housing Market -Freddie Mac

Freddie Mac said today that housing market stability "stumbled a bit" due to the cold winter weather and softening economic growth.  The company's Multi-Indicator Market Index (MiMi) declined slightly in January a decline described as broad-based rather than concentrated in just a few state or metropolitan markets.  Despite the lower MiMi index, Freddie Mac's economists said that "an improving labor market and attractive mortgage rates continue to promise a strong spring homebuying season."

The national MiMi value declined a slight 0.20 percent from December to January to stand at 74.6, indicating a weak housing market overall.  In addition to the month-over-month negative change there was a 3-month decline of -0.37 percent.  On a year-over-year basis, the U.S. housing market has improved by 3.39.

Fourteen of the 50 states plus the District of Columbia had MiMi values in a stable range in January, with North Dakota (96.9), the District of Columbia (96.3), Hawaii (90.1), Montana (90.0), and Wyoming (88.4) ranking in the top five.

Nine of the 50 metro areas included in the analysis were also in a stable range led by Austin (86.0), Los Angeles (85.2), San Jose (84.1), Houston (82.2), and San Francisco (82.2).  

In January, 11 of the 50 states and 21 of the 50 metros were showing an improving three month trend. The same time last year, 49 states plus the District of Columbia, and all 50 of the top 50 metro areas were showing an improving three month trend.

The MiMi index monitors and measures the stability of housing markets at the national, state, and metropolitan levels, combining proprietary 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. The MiMi formula takes into account 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 local markets, and the local employment picture. These indicators are combined to create a composite MiMi value for each market which shows where it stands relative to its own stable range of housing activity. MiMi also indicates how each market is trending, whether it is moving closer to, or further away from, its stable range.

The nation's all-time MiMi high of 121.7 was April 2006; its low was 57.4 in October 2010, when the housing market was at its weakest. Since that time, the housing market has made a 30 percent rebound.

Freddie Mac Deputy Chief Economist Len Kiefer said, "Housing markets weakened slightly this month, which is no surprise considering the harsh winter and slowdown in economic activity at the outset of 2015. While single-family purchase applications dipped a bit across the board from December to January, they are still up nearly 3 percent from last year. Improving employment and attractive mortgage rates should help to support increased purchase applications, particularly as the weather warms up and we head into the spring homebuying season."

"The good news is that mortgage delinquencies also continued their steady decline. The national MiMi current on mortgage indicator for January is up 10 percent from a year ago at 67.5, the highest level we've seen since in six years. The improvement in households paying their mortgages on time has been dramatic. For example, at its low point in February of 2010, California's MiMi current on mortgage indicator was just 22.8. Since then, California has seen major improvements and today the current on mortgage indicator is 77.6, showing a 240 percent improvement from its low point and an 8.2 percent improvement from one year ago."