As consumers purchase more homes, remain current on mortgage payments thanks to low rates, and employment continues to grow, the housing market continues to show improvement, according to data released by Freddie Mac on Friday.
Freddie Mac's Multi-Indicator Market Index (MiMi) showed that the U.S. housing market continued to stabilize as the national MiMi value reached 81.2 as of August 2015. This means that the market is on its outer range of stable housing activity.
The MiMi rose 0.27 percent from July to August and has shown a three-month improvement of 2.54 percent, according to Freddie Mac. Year-over-year, the MiM values has increased 6.16 percent and has rebounded 37 percent since the all-time low in October 2010. However, the value is still significantly lower than its high of 121.7.
"The nation's housing market continues to improve riding the wave of the best year in home sales since 2007," said Len Kiefer, Freddie Mac deputy chief economist. "With the MiMi purchase applications indicator at its highest level in more than seven years we expect home sales to remain strong. Low mortgage rates are fueling the recovery across the country."
The key drivers of the positive MiMi value were the current on mortgage indicator (83.7 points) and the employment indicator (103.3 points), both fell in range and increased 0.60 percent and 1.03 percent from July, respectively.
The purchase applications indicator fell at 66.9 points in a weak position, but increased 1.23 percent from last month. The payment-to-income indicator also came in weak at 70.9 points, and fell 2.03 percent from last month.
"The nation's housing market continues to improve riding the wave of the best year in home sales since 2007."—Len Kiefer
A total of 29 of the 50 states including the District of Columbia had MiMi values in the stable range, with the District of Columbia (103.9), North Dakota (96.9), Hawaii (93.5), Montana (93.2), and Utah (90.3) occupying the top five spots, Freddie Mac reported.
Meanwhile, 46 of the 100 metro areas have MiMi values that are stable, with Fresno (99.4), Austin (96.6), Honolulu (94.1), and Salt Lake City (93.3), and Los Angeles (93) occupying the top five spots.
"Buoyed by strong employment growth, housing supply is struggling to keep pace with demand, which is driving house prices higher," Kiefer said. "Fortunately, low mortgage interest rates are helping to keep homebuying affordable for some prospective homebuyers.
"Nationwide, housing markets are getting back to their long-term benchmark averages, but they still have room for improvement. We're expecting housing to sustain its momentum going into yearend, but we're going to need stronger income growth to carry housing throughout 2016."
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