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Cold Winter, Soft Economic Growth Cause Housing Market to Stumble

Freddie Mac January Multi-Indicator Market IndexThe housing market experienced winter doldrums in January as housing stumbled due to cold weather and slower economic growth, according to Freddie Mac's latest Multi-Indicator Market Index (MiMi) released on Wednesday.

The latest index experienced a broad-based decline in January despite recent improvements in the labor market and low mortgage rates that promised a strong homebuying season for the spring.

Just as it reported for December's national index, Freddie Mac reported that January's national MiMi value of 74.6 indicated a weak housing market and even declined slightly (0.20 percent) month-over-month despite a year-over-year increase of 3.39 percent. The all-time high for the national MiMi is 121.7, set in April 2006 prior to the recession. The all-time low for the national MiMi was 57.2, set in October 2010 at the height of the foreclosure wave. The housing market has rebounded by 30 percent since hitting that all-time low nearly four and a half years ago.

"Housing markets weakened slightly this month, which is no surprise considering the harsh winter and slowdown in economic activity at the outset of 2015," Freddie Mac Deputy Chief Economist Len Kiefer said. "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."

Two of the four indicators in the MiMi, purchase applications and payment to income, experienced slight month-over-month declines in January down to 63.4 and 68.3, respectively. The other two indicators, current on mortgage and employment, ticked up to 67.5 and 99.3, respectively.

Fourteen of the 50 states plus the District of Columbia and nine out of the top 50 metro areas had MiMi values in the stable range for January, compared to 16 states and 11 metro areas that had a MiMi value in the stable range for December, according to Freddie Mac. North Dakota had the highest MiMi value among states with 96.9, and Austin, Texas, had the highest MiMi value among metro areas at 86.0.

Eleven of the 50 states and 21 out of the 50 metros showed an improving three-month trend in MiMi value in January, a steep decline from December when 38 states and 40 metro areas showed an improving three-month trend. In January 2015, 49 states plus the District of Columbia and all 50 metro areas showed an improving three-month trend.

Freddie Mac reported in its February 2015 Monthly Volume Summary on Tuesday that the serious delinquency rate on mortgage loans backed by the GSE had fallen to 1.81 percent, its lowest level since 2008, and less than half the national average reported by CoreLogic at 4.0 percent for Janaury.

"The good news is that mortgage delinquencies also continued their steady decline," Keifer said. "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."

About Author: Brian Honea

Brian Honea's writing and editing career spans nearly two decades across many forms of media. He served as sports editor for two suburban newspaper chains in the DFW area and has freelanced for such publications as the Yahoo! Contributor Network, Dallas Home Improvement magazine, and the Dallas Morning News. He has written four non-fiction sports books, the latest of which, The Life of Coach Chuck Curtis, was published by the TCU Press in December 2014. A lifelong Texan, Brian received his master's degree from Amberton University in Garland.
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