Having made some progress toward stability in January, the housing market experienced a slight backslide in February, Freddie Mac reported Wednesday.
In the company’s second-ever Multi-Indicator Market Index (MiMi), analysts at Freddie Mac reported a national index value of -3.11, putting the U.S. market just on the “weak” side of a stable market (ranging from index values of -2 to 2).
Compiled using Freddie Mac’s own data along with local market statistics, MiMi was created to assess where each single-family housing market sits compared to its own long-term stable range in terms of home purchase applications, payment-to-income ratios, proportion of on-time mortgage payments, and local employment. The inaugural index for January was recorded at -3.08.
Focusing on the positive, Freddie Mac noted housing has improved by 0.67 points year-over-year, indicating an overall trend toward strength, with more than half of all states seeing improvements.
“Despite a slowdown over the winter months, the housing market continues to show improvement in most states, although at a somewhat slower pace,” said Frank Nothaft, VP and chief economist at Freddie Mac.
While some MiMi indicators have weakened—home purchase applications look particularly soft in many areas—Nothaft added that “gains in local employment and loan performance have really helped many markets across the country, especially those that were hardest hit.”
As of February, 11 states and the District of Columbia were recorded in their stable ranges of housing activity, unchanged from January. Out of that group, however, only Louisiana and Montana recovered compared to January, with those at the bottom—Vermont, Texas, and South Dakota in particular—veering closer toward instability.
Based on data reported so far for March, deputy chief economist Len Kiefer says the company expects an improvement despite continued weakness in home purchase applications.
“The other indicators are moving in the right direction ... so we’re likely going to continue to see that [positive trend] just because of the firming up on those indicators,” Kiefer said.