The year 2016 was the best for home sales in a decade by many counts, including the NAR’s latest existing-home sales report . But 2017 may turn out somewhat differently due to some recent changes in the market, according to Freddie Mac’s Multi-Indicator Market Index (MiMi)  for September 2016.
Nationally, the MiMi value was at 86 in September, still well below the historic benchmark normalized to a value of 100, even with a 5.6 percent increase over-the-year. The all-time high for the MiMi is 121.7, set in the bubble year of 2006. The MiMi measures the health of housing activity at the national, state, and metro levels using four indicators: purchase applications, payment-to-income, current on mortgage, and employment.
According to Freddie Mac, the purchase applications indicator was at 80.4 in September, a 19 percent over-the-year increase which pushed it to the outer edge of its historic benchmark range. The current on mortgage indicator, which measures on-time mortgage payments, was at 89.9. The employment indicator was highest of the four indicators with a value of 106.6.
“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,” Kiefer said. “However, the recent jump in mortgage rates will drive down homebuyer affordability and likely dampen demand for home sales next year. 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.”
A recent report from Redfin  found that demand may already be slowing. Redfin reported that its Housing Demand Index declined by 3.5 percent from September to October to a historical benchmark level of 100. The shortage of available homes for sale is likely to blame for the reduction in demand, according to Redfin.
Freddie Mac’s sentiment on home prices was similar to that of the most recent S&P CoreLogic Case-Shiller Home Price Index , which reported that prices were still 20 percent below their peak when inflation is factored in even though on the surface they have passed their peak from a decade ago. The payment-t0-income indicator of the MiMi, a measure of affordability based on home prices, mortgage rates, and household income, still lagged far behind its historical benchmark in September with a value of 67 (considered to be a “weak” level by Freddie Mac), down by nearly 4 percent from a year ago.
“National home prices have surpassed their pre-recession nominal peak with about half of states still below their pre-recession peak,” Freddie Mac Deputy Chief Economist Len Kiefer said. “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.”
The top-ranked metros in September, according to the MiMi, were Honolulu, Nashville, Ogden (Utah), Dallas, and Provo (Utah). The most improved metros were Las Vegas, Charleston (South Carolina), Seattle, Worcester (Massachusetts), and Springfield (Massachusetts).
Click here  to view the complete MiMi for September 2016.