Although the entire housing market of the United States is now steadying, those states with stronger economies are reportedly improving a lot faster than their counterparts, according to the latest housing report by Freddie Mac, the lending giant.
Freddie Mac's Multi Indicator Market Index (MiMi) gauges the health of the real estate market using the latest data in all 50 states plus the District of Columbia, the top 50 metros, and the nation. It analyzes "home purchase applications, payment-to-income ratios, proportion of current mortgage payments in each market, and the local employment picture" to arrive at the results. The index is released every month.
June's MiMi index showed the housing markets stalling at 73.7 points, a number that still indicates weakness. However, in states where demographics and economy reflected strong growth, the markets rebound at a stronger pace.
About 25 of the 50 total metro areas tracked by Freddie Mac showed some improvement in the past three months. These were the metros that showed the most improvement:
- Las Vegas, Nev.
- Riverside, Calif.
- Miami, Fla.
- Orlando, Fla.
- Chicago, Ill.
Also, these were the states that showed the most growth in the past three months.
- Nevada
- Florida
- Illinois
- California
- South Carolina
"As we see the economy slowly normalizing we're starting to see its effects in the housing market as well, albeit very slowly," Frank Nothaft, Freddie Mac's chief economist, said in a statement. "The good news is the big housing markets, of which some were also the hardest hit, continue to improve."
"Likewise, the stalwarts of the recovery continue to be those states in the North Central section of the country, places like North Dakota, Montana, Wyoming, and then south to Texas and Louisiana," Nothaft added. "In these areas not only are markets producing jobs, but better paying jobs that translate into workers taking out applications to purchase a home and income growth that keeps homebuyer affordability strong."
The Freddie Mac index comes amid several other reports that have been measuring the housing market's health. More recently, the S&P/ case Shiller Index showed that the pace of home prices across the states have slowed down. It also revealed that inventory of homes have accelerated. But analysts note that most of the pick-up in inventory came from the rise in multi-family units, which usually attract low income renters. Therefore, experts warn investors of treading cautiously.
"The data remains inconclusive and uneven, and that's the nature of the housing recovery right now," Dan Veru, chief investment officer at Palisade Capital told Reuters.
