Morning Briefing: Housing market strengthens says Freddie Mac

by Steve Randall27 Aug 2015
Housing market strengthens says Freddie Mac
New data from Freddie Mac shows that the US housing market is continuing to strengthen with more states and metros being deemed as “stable”. Twenty-eight of the 50 states plus the District of Columbia have MiMi (Multi-Indicator Market Index) values in a stable range, with the District of Columbia (101.7), North Dakota (96.2), Montana (93.5), Hawaii (92.9), and California and Utah tied at (89) and ranking in the top five. Forty-two of the 100 metro areas have MiMi values in a stable range, with Fresno (96.8), Austin (94.9), Honolulu (93.7), Salt Lake City (91.7) and Los Angeles (91.5) ranking in the top five.

Freddie Mac chief economist ken Liefer commented: "While home prices are still 7 per cent below peak values nationally, price indices in many markets are at all-time highs and current low interest rates are helping to support homebuyer affordability.” He said that some markets that were hardest hit by the recession still have high levels of mortgage delinquencies but overall they are coming down rapidly.
Mortgage applications increase
Once again the number of new mortgage applications has increased according to the weekly survey from the Mortgage Bankers’ Association. The 0.2 per cent increase for the week ending Aug. 21 was driven by government home purchase loan applications.

On an unadjusted basis, the Market Composite Index decreased 1 per cent compared with the previous week; the Refinance Index decreased 1 per cent; the seasonally adjusted Purchase Index increased 2 per cent; the unadjusted Purchase Index decreased 0.3 per cent.

The seasonally adjusted FHA purchase index rose by 5.6 per cent from the previous week while the seasonally adjusted VA purchase index rose by 5.2 per cent. Conventional purchase applications were essentially unchanged from the previous week.

The refinance share of mortgage activity decreased to 55.3 per cent of total applications from 55.5 percent the previous week; ARM’s decreased to 6.8 percent of total applications; FHA share increased to 13.1 per cent from 12.9 percent the week prior;  VA share of total applications increased to 11.4 per cent from 11.1 per cent the week prior. The USDA share of total applications remained unchanged at 0.8 per cent from the week prior.
California’s cycle of unaffordability
California’s homeowners are being put off selling because they can’t afford another home; but that’s compounding the lack of inventory that’s driving up prices. It’s caused a cycle of unaffordability that’s highlighted by the inaugural Survey of California Homeowners from the California Association of Realtors.

It found that 64 per cent of owners have decided not to sell as they don’t believe they can afford the home they want; 59 per cent say they haven’t seriously considered selling; and 60 per cent say their home is their retirement property.

Almost half of respondents have considered moving out of California with Texas, Oregon and New York among the contenders for their new home. Twenty four per cent of those polled do not have a mortgage and of those who do most (77 per cent) have a rate below 5 per cent. 


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