Freddie Mac's Multi-Indicator Market Index (MiMi) showed that the U.S. housing market continued to stabilize as the MiMi value reached 81.9 as of October 2015, meaning that the market is on its outer range of stable housing activity.
According to the report, the MiMi value is up 0.59 percent month-over-month and 6.31 percent year-over-year. Over the last three months, the MiMi has risen 1.54 percent.
The MiMi is up 38 percent from the all-time low recorded in October 2010, but remains far off from the peak of 121.7, the report stated.
"The strong annual change of 6.31 percent is the best improvement we've seen in the MiMi on a year-over-year basis since July 2014," said Freddie Mac Deputy Chief Economist Len Kiefer. "While strong home purchase applications and rising home values in some markets are contributing to this improvement, its largely more of a reflection of mortgage delinquencies continuing to decline at a steady pace, especially in those hardest hit markets, and a better employment picture overall."
So what exactly is pushing the MiMi value upward?
Freddie Mac reported that the employment indicator rose 0.74 percent to 105.2 points in October 2015. Year-over-year, the employment indicator is up 7.86 percent. The current on mortgage indicator reached 85.3 points, up 1.61 percent month-over-month.
Although the purchase application indicator rose 0.56 percent to 67.9 points, it remains weak and out of range, the data found.
The payment-to-income indicator was the only one to see a decline, falling 0.89 percent to 68.9 points in October.
The report showed that 32 of the 50 states, including the District of Columbia have MiMi values that are in the stable range.
"States in the West are still seeing some of the strongest housing activity and among those Utah really stands out," Kiefer noted. "Not only do many of the state's local housing markets such as Salt Lake City, Provo and Ogden have strong buyer demand but they're also still largely affordable for the typical family looking for a median priced home. This is due to the state's robust economy and better than average job creation."
The top five states with MiMi values in the stable range include:
- District of Columbia (101.1)
- North Dakota (95.3)
- Montana (95.1)
- Hawaii (94.1)
- Utah (92)
"We do expect homebuyer affordability to decrease in the coming year, but we don't expect tighter monetary policy to generate a spike in longer-term interest rates in the foreseeable future. The Fed has committed publicly to measured increases in short-term rates. While mortgage rates will rise modestly, they will still remain at historically low levels. Combined with stronger job and income growth, the net result may be strong growth in household formation, construction, and home sales," Kiefer concluded.
Click here to view the full report.