More than half of the states plus the District of Columbia, along with more than a third of the nation's largest metro areas, were categorized as in the "stable" range in April on the strength of a healthy spring homebuying season, according to Freddie Mac's April 2015 Multi-Indicator Market Index (MiMi) released Wednesday.
In addition to 26 states that fell in the stable range, 35 of the nation's top 100 metro areas had a MiMi value in the stable range in April, according to Freddie Mac. The overall value of the MiMi in April was 78.7, which is still termed as weak but is only slightly below stable range (which is 80 to 120). Moreover, April's MiMi value represented an improvement 0f 0.14 percent from March to April, a three-month improvement of 2.10 percent, and a year-over-year improvement of 3.57 percent. While April's value of 78.7 is significantly off from the all-time high MiMi value of 121.7 reached in April 2006, it is an improvement of about 33 percent from its record low of 57.4 registered in October 2010.
"We saw a significant improvement in housing markets nationwide, with ten more metro areas and nine more states moving within range of their benchmark, stable level of housing activity," said Len Kiefer, Freddie Mac's Deputy Chief Economist. "The West and Southwest areas of the country continue to lead the way, especially Colorado, Oregon and Utah, and California is right there as well. Unlike a year ago, when the most improving markets were those hardest hit by the Great Recession, we're now seeing stable markets among the most improving as well. So the strong housing markets are getting stronger, which reflects the better employment picture, rising home values and increased purchase activity in these markets with the spring homebuying season in full swing."
The top five MiMi values among states and the District of Columbia in April were District of Columbia (97.8), North Dakota (96.3), Montana (92), Hawaii (91), and Alaska (87.4). The five metros with the highest MiMi value in April were Fresno (94.8), Honolulu (92.3), Austin (92.1), Los Angeles (89.1) and Salt Lake City (88.9).
Freddie Mac's report of more stabilization nationwide in the housing market was right in line with the GSE's economic outlook for June 2015, released just one day earlier, which showed that Americans may be ready to take on more mortgage debt due to low debt servicing costs and improved household balance sheets.
Single-family mortgage debt outstanding (MDO) is expected to accelerate for the rest of 2015 and into 2016 and 2017 as house prices and home sales increase while the cash share of home sales declines, according to Freddie Mac. Also, the increase in aggregate mortgage debt is back to its long-term average of about 30 percent with each new home loan.
"Low mortgage rates and years of debt consolidation have led mortgage servicing costs as a share of disposable income to the lowest levels we've seen in decades," Kiefer said. "After many fits and starts, the data finally show that not only are more Americans taking out a mortgage to purchase a home, but that total outstanding debt on single-family properties has increased on a year-over-year basis. This is yet another sign the economy, and housing markets, are pivoting toward normalcy."