Freddie Mac's Multi-Indicator Market Index (MiMi) is now showing that most of the nation's housing markets are, at a minimum, on the outer range of their normal housing activity. The national MiMi in January was 82.7, a .18 percent improvement from December and a three-month positive change of 1.46 percent. Since January 2015 the MiMi value has risen by 7.57 percent.
Freddie Mac constructs its index to monitor and measure the stability of the nation's housing market and markets in all 50 states, the District of Columbia and the top 100 metro markets. It is compiled from local area housing data including home purchase applications, payment-to-income ratios (changes in home purchasing power based on house prices, mortgage rates and household income), and proportion of on-time mortgage payments in each market, and data on employment. The company combines the local information it with its own proprietary data to show where each market stands relative to its own historic range of housing and activity and the direction in which it is trending. A market can fall outside its stable range by being too weak to generate enough demand for a well-balanced housing market or by overheating to an unsustainable level of activity. The MiMi is up 40 percent from its all-time low in October 2010 but remains well below its high of 121.7.
Thirty-four of the 50 states plus the District of Columbia have MiMi values within range of their benchmark averages compared to 22 states and the District a year earlier. The District leads with an index of 101.8, followed by North Dakota, Hawaii, Montana, and Utah, all with levels in the mid-90s.
Fifty-six of the 100 metro areas have MiMi values within range, up from 29 in January 2015. Denver, Austin, Salt Lake City, Honolulu, and Los Angeles make up the top five, all scoring in the 97-99 range.
In January, 44 of the 50 states and 78 of the top 100 metros were showing an improving three-month trend compared to 13 states, and 42 metro areas a year earlier.
Freddie Mac Deputy Chief Economist Len Kiefer said of the current MiMi report, "Despite a stronger jobs market and declining unemployment, wage gains have not kept pace with house prices putting a pinch on homebuyer affordability. In the top 100 metro areas MiMi tracks, Los Angeles and Honolulu have elevated payment-to-income indicators and Miami, FL, is very close to elevated. An additional six metro areas have their MiMi payment-to-income indicators over 100, indicating that the payment-to-income statistic for that area is above its historic benchmark. At the state level, the District of Columbia has an elevated payment-to-income indicator while Hawaii and California have values above 100.
"These payment-to-income indicators are high despite the fact that mortgage interest rates remain low. Mortgage rates fell at the start of the year, helping to bolster affordability heading into the spring season. But a lack of available inventory of for-sale homes has constrained many markets. We see that reflected in the MiMi purchase applications indicator, which remains weak nationwide," Kiefer said.
