The U.S. housing market in October continued to improve, resulting in a 0.59% increase in Freddie Mac's Multi-Indicator Market Index (MiMi) compared with September.
As of the end of October, the index score was around 81.9, indicating a housing market that was on its outer range of stable housing activity. The index had increased 1.54% during the three months ended Oct. 30, according to Freddie Mac.
On a year-over-year basis, the index increased 6.31%. Since its all-time low in October 2010, the national MiMi has rebounded 38% but remains significantly off from its high score of 121.7.
As of the end of October, 32 of the 50 states plus the District of Columbia had MiMi values in a stable range, with the District of Columbia (101.1), North Dakota (95.3), Montana (95.1), Hawaii (94.1) and Utah (92) ranking in the top five.
In October 2014, only 21 states and the District of Columbia had MiMi values in a stable range.
States that saw the most improvement in their MiMi scores in October compared with September included New York (1.90%), New Jersey (1.79%), Florida (1.29%), Nevada (1.27%) and Oregon (1.26%).
States that saw the most improvement on a year-over-year basis included Florida (14.47%), Oregon (12.2%), Colorado (11.97%), Washington (11.69%) and Nevada (11.13%).
In October, 43 of the 50 states and 89 of the top 100 metros were showing an improving three-month trend. In comparison, 36 of the 50 states, and 70 of the top 100 metro areas were showing an improving three-month trend as of October 2014.
‘The strong annual change of 6.31 percent is the best improvement we've seen in the MiMi on a year-over-year basis since July 2014,’ says Len Kiefer, deputy chief economist with Freddie Mac, in a release. ‘While strong home purchase applications and rising home values in some markets are contributing to this improvement, its largely more of a reflection of mortgage delinquencies continuing to decline at a steady pace – especially in those hardest hit markets – and a better employment picture overall.
‘States in the West are still seeing some of the strongest housing activity and among those Utah really stands out,’ Kiefer says. ‘Not only do many of the state's local housing markets – such as Salt Lake City, Provo and Ogden – have strong buyer demand, but they're also still largely affordable for the typical family looking for a median-priced home. This is due to the state's robust economy and better-than-average job creation.’
‘We do expect home buyer affordability to decrease in the coming year, but we don't expect tighter monetary policy to generate a spike in longer-term interest rates in the foreseeable future,’ he adds. ‘The Fed has committed publicly to measured increases in short-term rates. While mortgage rates will rise modestly, they will still remain at historically low levels. Combined with stronger job and income growth, the net result may be strong growth in household formation, construction and home sales.’
The index, which was introduced last year, 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.