The U.S. housing market continued to improve in September, according to Freddie Mac’s Multi-Indicator Market Index (MiMi).
In fact, the index shows that 2016 has, so far, been the best year in home sales in a decade.
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 mortgages and employment.
As of the end of September, the index value stood at 86, indicating a housing market that’s on the outer edge of its historic benchmark range of housing activity. That’s up from a score of 85.7 as of the end of August.
Since its all-time low in October 2010, the national MiMi has rebounded 45%, but remains significantly off its high of 121.7, Freddie Mac reports.
Forty-one of the 50 states plus the District of Columbia had MiMi values within range of their benchmark averages, with Utah (100.4), Colorado (97.8), Hawaii (97), Idaho (96.7), and North Dakota and Oregon at (95.8) ranking in the top five with scores closest to their historical benchmark index levels of 100.
Seventy-six of the 100 metro areas had MiMi values within range of their benchmark averages, with Honolulu (99.8); Nashville, Tenn. (100.2); Ogden, Utah (99.3); Dallas (99.2); and Provo, Utah (101) ranking in the top five with scores closest to their historical benchmark index levels of 100.
States that saw the most improvement, month over month, were Nevada (+2.59%), Arizona (+1.54%), Massachusetts (+1.53%), South Carolina (+1.34%) and Colorado (+1.24%).
On a year-over-year basis, states that saw the most improvement were Nevada (+11.74%), Florida (+11.58%), Massachusetts (+11.35%), Mississippi (+9.76%) and New Jersey (+9.61%).
“The National MiMi stands at 86, a 5.6 percent year-over-year increase, but still below its historic benchmark normalized to 100,” says Len Kiefer, deputy chief economist for Freddie Mac, in a release. “The purchase applications indicator is up nearly 19 percent from last year, indicating strong housing demand and a market that’s poised to close out the best year in home sales in a decade.
“National home prices have surpassed their pre-recession nominal peak with about half of states still below their pre-recession peak,” Kiefer adds. “Factoring in low mortgage rates and modest income gains, house prices still have some room to run, as indicated by the MiMi payment-to-income indicator which is nearly 33 percent below its historic benchmark.
“However, the recent jump in mortgage rates will drive down home buyer affordability and likely dampen demand for home sales next year,” he continues. “Though we’ve come far, as indicated in the national statistics, housing still has significant room for improvement in many markets across the country as indicated by the fact that 24 out of the top 100 metros are still more than 20 percent below their historic benchmark as measured by MiMi.”