The housing market once again reported stagnant growth in May, with declines in home purchase applications continuing to strain the recovery.
Freddie Mac’s Multi-Indicator Market Index slightly dipped from -2.59 last month to -2.64 in May. This indicates a weak housing market overall with a three-month trend change of .06 points, showing a flat housing market.
Last month was revised down from -3.01 in April to -2.59 to account for refinements to the index.
On a positive note, year-over-year, the housing market has improved by .86 points. As a frame of reference, the nation’s all-time MiMi low was in November 2010 at -4.42.
But despite poor purchase applications, other housing indicators are coming in strong.
“When we look at the other MiMi indicators outside of mortgage purchase applications, the news remains positive - unemployment rates are coming down, more borrowers are paying their mortgages on time, and mortgage rates remain low,” Freddie Mac Chief Economist Frank Nothaft said.
“Moreover, while house price growth is moderating, many markets can still sustain additional house price gains while still maintaining strong homebuyer affordability. So we remain cautiously optimistic the housing recovery will continue, albeit slowly, until we see more tightening in the labor markets to give personal incomes a much-needed jolt,” Nothaft added.
Meanwhile, more markets are moving into their stable range of housing activity, including Salt Lake City, Los Angeles, Nashville and Pittsburg metro areas, as well as Idaho and Utah.
"It’s no surprise markets aren’t improving at the same pace as last year. Nevertheless, it’s encouraging to see more markets healing. The standout this month is the Salt Lake City metro area with three of its four MiMi indicators back in their stable range of activity. In fact, on a yearly basis, the metro area finds its purchase applications are up on a year-over-year basis,” Freddie Mac Deputy Chief Economist Len Kiefer said.