Despite some signs of improvement, the U.S. housing market continued to be ‘weak’ in June, according to Freddie Mac's Multi-Indicator Market Index (MiMi).
The 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.
Although the market remains depressed, overall, it has improved slightly for each of the past three months, according to the index. There was only a slight improvement (0.04%) from May to June. For the second quarter, there was a positive trend change of 0.16%.
As is to be expected, the housing sector's recovery is spotty in nature, with some areas seeing great gains while other areas continue to struggle.
States that saw the biggest improvement in market conditions in June, on a month-over-month basis, included Nevada (1.56%), Illinois (1.09%), Connecticut (0.93%), Rhode Island (0.87%), Colorado (0.82%) and Kentucky (0.82%).
States that saw the biggest improvement on a year-over-year basis included Nevada (23.5%), Florida (14.8%), Illinois (12.9%), California (12.0%) and South Carolina (11.9%).
Metropolitan areas that saw the biggest improvement in market conditions in June, on a month-over-month basis, included Las Vegas (1.69%); Riverside, Calif. (1.69%); San Jose, Calif. (1.48%); Chicago (1.30%); and Miami (+1.19%).
Metropolitan areas that saw the biggest improvement on a year-over-year basis included Las Vegas (26.5%); Riverside (19.2%); Miami (17.2%); Orlando, Fla. (16.1%); and Chicago (+15.9%).
Freddie Mac also released its second quarter MiMi report, which includes further analysis on each of the states, plus the District of Columbia as well as the top 50 metros areas.
‘As we see the economy slowly normalizing, we're starting to see its effects in the housing market as well, albeit very slowly,’ says Frank Nothaft, chief economist for Freddie Mac, in a release. ‘The good news is the big housing markets, of which some were also the hardest hit, continue to improve.
‘For example, from the same time last year, California is up 12 percent, and every market MiMi tracks in the state is improving,’ Nothaft continues. ‘Meanwhile, Florida is up nearly 15 percent, and Illinois is up nearly 13 percent over the past year. Likewise, the stalwarts of the recovery continue to be those states in the North Central section of the country, places like North Dakota, Montana, Wyoming and then south to Texas and Louisiana. In these areas, not only are markets producing jobs, but better paying jobs that translate into workers taking out applications to purchase a home and income growth that keeps home buyer affordability strong.’
Looking at the quarterly report, ‘The most improved metro and state markets over the quarter were Las Vegas and Illinois, which were up nearly 5 and 4 percent respectively,’ says Len Kiefer, deputy chief economist for Freddie Mac.
‘Though Las Vegas has shown considerable improvement, it is still a weak market, with the lowest overall MiMi index value of 48.2 as of June,’ Kiefer says. ‘Driving the improvement in Illinois over the past three months is the employment indicator, which is up 16.9 percent while the current-on-mortgage indicator is up 3.8 percent since March. In fact, the employment indicator in Illinois moved from 'weak' to its stable 'in range' status over the past quarter, reflecting improvements in local labor market conditions.’
Freddie Mac reports that with the latest release of MiMi, the index has been re-scaled, making the data more transparent and easier for housing professionals and analysts to follow.