Housing Markets Grinding Toward Historical Benchmarks

The nation’s housing market is on the outer range of its historical benchmark of housing activity while individual markets continue to slowly grind toward their historical benchmarks, according to Freddie Mac’s April 2016 Multi-Indicator Market Index (MiMi) released Wednesday.

The national MiMi, which measures the health of housing nationwide, had a value for April was 84.1, which is on the outer range of stable (a value of between 80 and 120 is considered in the range of stable). Year-over-year, the national MiMi improved by 7.37 percentage points and has rebounded by 42 percent since hitting its all-time low in October 2010. April’s value of 84.1 was still significantly lower than the national MiMi’s all-time high of 121.7.

Two additional metros (Charlotte, North Carolina, and Knoxville, Tennessee) entered their benchmark ranges in April, according to Freddie Mac. Out of the 100 metros tracked by MiMi, 99 of them experienced year-over-year gains. The only one that did not was Tulsa, Oklahoma, which posted no change.

“Seven years into the recovery from the Great Recession most of the nation's housing markets remain below their historical benchmarks, but continue to grind higher month-by-month,” Freddie Mac Deputy Chief Economist Len Kiefer said. “Nationally, MiMi in April 2016, is 84.1, a 7.37 percent year-over-year increase and the 48th consecutive month of year-over-year increases. Over this four-year timeframe, MiMi has increased 36.5 percent and now stands just 15.9 percent below its historic benchmark average.”

The national MiMi consists of four indicators: purchase applications (74.1), payment-to-income (68.7), current on mortgage (87.2), and employment (106.2). The current on mortgage indicator was in the lower range of stable, while the employment indicator was in the high range of stable.

“Among the four MiMi indicators, Purchase Applications increased the most in April, rising 1.77 percent from March and up 15.27 percent year over year,” Kiefer said. “The strong positive momentum in home purchase applications is a good sign for a housing market likely to post the best year in home sales since 2006. Despite strong house price growth, the MiMi Payment-to-Income indicator fell 1.05 percent in March, reflecting the impact of lower mortgage rates. If global factors like the Brexit put significant downward pressure on long-term mortgage rates, the U.S. housing market could benefit from increased affordability, helping to partially offset the impact of house prices, which are rising around six percentage points year over year nationally.”

Click here to view Freddie Mac’s April MiMi.