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Housing Market Continues Slow Climb Toward Stable Levels

Freddie Mac Multi-Indicator Market IndexThe latest Multi-Indicator Market Index (MiMi) from Freddie Mac, released Wednesday, showed that the U.S. housing market showed continued stabilization for the fourth straight month in December.

According to the latest MiMi, 38 states plus the District of Columbia and 40 out of 50 metros showed an improving three-month trend in December. The metro areas of Buffalo, Boston, and Nashville, all entered their "benchmark stable" ranges of housing activity.

While Freddie Mac said the latest MiMi value indicated a weak housing market, it has been showing improvement. The national MiMi value for December was reported at 74.9, which is a year-over-year increase of 4.41 percent and a slight uptick of 0.37 percent from November to December. 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 crisis. The housing market has rebounded by 31 percent since hitting that all-time low nearly four and a half years ago.

"Housing markets are getting back on track," said Len Kiefer, Deputy Chief Economist for Freddie Mac. "The national MiMi improved for the fourth consecutive month. Nearly 80 percent of the state and metro housing markets MiMi tracks are improving or in their stable range of activity. We've even seen the MiMi purchase application indicator increase 0.07 percent on a year-over-year basis. Low mortgage rates and moderating house price growth are helping to keep payment-to-income ratios favorable for the typical family in most of the country. In fact, Los Angeles is the only metro market with an elevated MiMi payment-to-income indicator whereas most other markets remain quite affordable. And of course, labor markets are generally improving."

According to Freddie Mac, 16 states plus the District of Columbia and 11 out of 50 metro areas have MiMi values in the stable range for December. District of Columbia was tops with 97.6, followed closely by North Dakota (97.2) and Montana (91.1). Of Metro areas, Los Angeles had the highest MiMi value for the month at 86.4, followed by Austin (86.3) and San Jose (83.9).

While 38 states and 40 out of 50 metro areas showed an improving three-month trend in MiMi value for December, those numbers are down from December 2013. For that month, 47 states plus the District of Columbia and 47 of 50 metro areas showed an improving three-month trend.

Three out of the four indicators in the December MiMi increased month-over-month and year-over-year: the purchase applications indicator  reported a MiMi value in December of 63.4, an increase of 0.41 from November and 0.07 percent from December 2013); the current on mortgage indicator reported a December MiMi value of 67.2, which is an increase of 0.48 percent month-over-month and 7.97 percent year-over-year; and the employment indicator's December MiMi value of 99.1 was a jump of 2.01 percent from November and 13.52 percent from December 2013. The only indicator out of the four that declined was payment-to-income, which in December fell by 1.97 percent month-over-month and 5.59 percent year-over-year to its reported value of 70.0.

"As we mentioned last month, we're keeping an eye on markets with deep ties to energy," Kiefer said. "We've seen some deterioration on a month-over-month basis in some of these energy markets. For example, Louisiana has seen its state employment situation deteriorate over the last several months. A declining employment indicator has caused its MiMi score to move from 86.7 in April down to 80.2."

About Author: Brian Honea

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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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