MiMi: Housing Market Keeps Gaining Strength
Three additional states – Indiana, Alabama and New Jersey – and one additional metro area – Dayton, Ohio – entered their historic benchmark levels of housing activity in August, according to Freddie Mac’s Multi-Indicator Market Index (MiMi).
The index, which was introduced last year, measures the overall strength of the housing market based on four indicators: purchase applications, payment-to-income ratios, percent of borrowers current on their mortgages and employment.
As of the end of August, the index score was 85.7, indicating a housing market that’s on the outer edge of its historic benchmark range of housing activity. That’s an improvement of 1.05% compared with July, according to the report.
For the three-month period ended with August, the index score improved 1.22%.
And on a year-over-year basis, it improved 5.44%.
What’s more, since the all-time low that came in October 2010, the national MiMi has rebounded 43%.
Still, the index remains significantly off its high score of 121.7.
Forty-one of the 50 states, plus the District of Columbia, had MiMi values within range of their benchmark averages, with Utah (99.2), Colorado (96.6), Hawaii (96.3), Idaho (96.0) and North Dakota (95.4) ranking in the top five with scores closest to their historical benchmark index levels of 100.
Eighty of the 100 metro areas had MiMi values within range, with Los Angeles (101.1); Honolulu (99.5); Provo, Utah (100.8); Dallas (98.9); and Ogden, Utah (98.6) ranking in the top five with scores closest to their historical benchmark index levels of 100.
The most improving states month over month were Nevada (+2.95%), Florida (+2.14%), Illinois (+1.95%), Washington (+1.91%) and Alabama (+1.90%).
On a year-over-year basis, the most improving states were Florida (+12.13%), Massachusetts (+9.94%), Nevada (+9.94%), Oregon (+9.43%) and Tennessee (+9.39%).
The most improving metro areas month over month were Las Vegas (+3.00%); Palm Bay, Fla. (+2.63%); Tampa, Fla. (+2.59%); Orlando, Fla. (+2.40%); and Sarasota, Fla. (+2.40%).
On a year-over-year basis, the most improving metro areas were Orlando, Fla. (+18.21%); Tampa, Fla. (+14.78%); Chattanooga, Tenn. (+14.51%); Palm Bay, Fla. (+14.25%); and Lakeland, Fla. (+13.66%).
In August, 33 of the 50 states and 73 of the top 100 metros were showing an improving three-month trend. The same time last year, all 50 states and 96 of the top 100 metro areas were showing an improving three-month trend.
“Housing markets are on track for their best year in a decade, and that’s reflected in MiMi,” says Len Kiefer, deputy chief economist for Freddie Mac, in a release.
“The National MiMi stands at 85.7, a 5.4 percent year-over-year increase. The MiMi purchase applications indicator is up over 18 percent from last year and is at its highest level since December 2007.
“The housing market is showing strength across the country,” he adds. “The South continues to show some of the biggest improvements, especially in Florida. MiMi’s purchase applications indicator is up more than 30 percent in Florida compared to last year. Meanwhile, in the West, the battle between low mortgage rates and rising house prices continues. So far, low mortgage rates have helped on the affordability front, but in hot markets like Denver, Fresno, Provo and Los Angeles, it’s becoming increasingly difficult for the typical family to afford a median-price home.”
Pending Home Sales Increased 1.5% In September
Pending home sales increased 1.5% in September compared with August to reach an index score of 110.0 on the National Association of Realtors’ (NAR) pending home sales index.
The increase comes after pending home sales fell 2.4% in August. NAR notes that the index score from August was revised downward to 108.4.
Driving the increase was a big jump in the West and a substantial bump in the South.
The index is now 2.4% higher than September 2015, when the score was 107.4. It has now risen year over year for 22 of the last 25 months.
As has been the case for the past year or more, tight inventory is the main culprit holding home sales back.
In a statement, Lawrence Yun, chief economist for NAR, says, “Buyer demand is holding up impressively well this fall,” yet “depressed inventory levels are keeping home prices elevated in most of the country.” This, in turn, impacts affordability.
Still, “Steady job gains and growing evidence that wages are finally starting to tick up are encouraging more households to consider buying a home,” Yun says.
NAR notes that distressed sales – foreclosures and short sales – fell to 4.0%, which is the lowest share since it began tracking them in October 2008.
Sales to first-time buyers were at about 34.0% in September. It was the highest share since July 2012. What’s more, it is up significantly from 29.0% from September 2015.
First-Time Home Buyers Propelled Existing-Home Sales In September
Existing-home sales rebounded in September, reaching a seasonally adjusted annual rate of 5.47 million – an increase of 3.2% compared with a downwardly revised 5.30 million in August, according to the National Association of Realtors (NAR).
On a year-over-year basis, existing-home sales were up 0.6% compared with September 2015, when the annual pace was about 5.44 million.
The median price for all housing types (single-family homes, townhomes, condominiums and co-ops) was $234,200, up 5.6% compared with $221,700 in September 2015.
September was the 55th consecutive month that existing-home sales increased on a year-over-year basis.
Helping to propel existing-home sales in September was an increase in the share of first-time home buyers, who represented about 34% of all sales. That is a sharp increase compared with about 31% in August. Before the crisis, first-time home buyers represented between 35% and 40% of all home sales.
All major regions saw an increase in closings, and distressed sales fell to a new low of 4% of the market.
New Home Sales Rebounded In September
After decreasing 7.6% in August, new home sales in September were at a seasonally adjusted annual rate of 593,000, an increase of 3.1% compared with the revised rate of 575,000 in August and an increase of 29.8% compared with 457,000 in September 2015, according to estimates released jointly by the U.S. Census Bureau and the U.S. Department of Housing and Urban Development.
The median sales price of a new home sold in September was $313,500; the average sales price was $377,700.
As of the end of the month, there were about 235,000 new homes available for sale in the U.S. – about a 4.8-month supply at the current sales rate.
“New home sales have been trending upward all year, and this gradual increase is in line with other positive signals, including rising single-family starts and solid builder sentiment,” says Ed Brady, chairman of the National Association of Home Builders (NAHB), in a statement.
“Low mortgage rates, continued job growth and tight inventory levels are all factors that point to increased housing production as we move into 2017,” adds Robert Dietz, chief economist for NAHB.
Regionally, new home sales increased 33.3% in the Northeast, 8.6% in the Midwest and 3.4% in the South. Sales fell 4.5% in the West.
Interestingly, most of the rebound in September was in the Northeast: In August, new home sales in the region decreased by 34.3%.
Housing Starts Jumped 25% In October
Housing starts were at a seasonally adjusted annual rate of about 1.323 million in October – an increase of 25.5% compared with a revised estimate of 1.054 million in September and an increase of 23.3% compared with about 1.073 million in October 2015, according to figures released by the U.S. Census Bureau and the U.S. Department of Housing and Urban Development.
Most of the increase was driven by a major spike in the number of starts of multifamily homes.
Starts of single-family homes were at a rate of about 869,000, an increase of 10.7% compared with about 785,000 in September. Starts of multifamily homes (five units or more per building) were at a rate of about 445,000 – up a surprising 74.5% compared with about 225,000 in September.
Building permits in October were at a seasonally adjusted annual rate of 1.229 million, an increase of 0.3% compared with the revised rate of about 1.225 million in September.