Freddie Mac's Multi-Indicator Market Index (MiMi) slipped 0.19 percent from July to a reading of 73.3 in August, the company reported. With the drop, the index's three-month measure showed a 0.47 percent decline.
On an annual basis, the national market improved 4.09 percent.
A recently introduced measure, the MiMi gauges housing market conditions based on home purchase mortgage applications, payment-to-income ratios, proportion of on-time payments, and employment, comparing each component to its long-term stable range. An index value between 80 and 120 indicates a market based on stable ground, with readings below or above that range indicative of an environment either too weak to support long-term growth or too overheated to be sustainable.
Since hitting a trough of 59.8 in September 2011, the index has rebounded 22.6 percent.
Of the four indicators tracked, only the employment gauge was in a stable spot, falling half a percent to 92.9 as the economy continues to show strong job growth. Among the other three, payment-to-income ratios and mortgage delinquency improved over the month, climbing to readings of 69.3 and 66.4, respectively.
The measure of home purchase applications, meanwhile, fell 0.73 percent to 64.6. As refinance volumes diminish, the purchase mortgage market has been slow to fill the open space.
Despite August's headline decline, analysts at Freddie Mac say the MiMi is showing promising trends, especially at the local level.
"The bleeding has stopped from the rate increases from a year ago which is reflected in the stable picture at the national level," said Frank Nothaft, VP and chief economist for Freddie Mac. "Moreover, we've seen a pick-up in the number of states and metros improving at the local levels based on their three month trend pointing once again to more housing markets working their way back to the fundamentals which is reflected in the key indicators MiMi tracks each month."
In August, 18 of the 50 states showed an improving three-month trend, as did 18 of the 50 metros tracked.
Overall, 13 states and the District of Columbia have MiMi values in a stable range, with North Dakota (96.1), D.C. (93.5), Wyoming (91), Montana (89.4), and Alaska (87.7) ranking in the top five. Out of those, only North Dakota improved from July.
Meanwhile, the same six metros remained on stable ground: San Antonio (90.9), Austin (87.0), Houston (83.6), Salt Lake City (83.6), New Orleans (83), and Los Angeles (82.8).