COLUMBUS, OH -- The U.S. housing market is continuing to see positive momentum, helped strongly by low and falling unemployment rates, sparking a series of interrelated events that has led to increased demand among renters and buyers. In turn, the U.S. housing market is healthy with little chance of a housing downturn in the next year, according to the latest quarterly housing market barometer released today by Nationwide, a leading insurance and financial services organization.
The forward-looking Health of Housing Markets Report (HoHM Report) evaluates the housing health for the U.S. and 400 metropolitan statistical areas (MSAs). Performance rankings show that the housing markets in the vast majority of metropolitan statistical areas and divisions are healthy. This suggests that most local housing markets may see sustainable expansion over the next year.
The report also indicates that:
The most sustainable housing markets in the nation tend to be located in the Midwest, with steady job gains, accelerating household formations, and house price appreciation that is mostly in line with incomes.
Lower energy prices continue to weaken the outlook for regional housing markets with strong ties to the energy sector -- the majority of the bottom 10 MSAs are in Texas and Louisiana.
Rapid national house price appreciation is reducing affordability, and is a risk to housing sustainability.
"In most regional markets we're seeing that housing fundamentals are close to the strongest they've been in almost a decade," said David Berson, Nationwide's senior vice president and chief economist. "This is thanks to a strong labor market, low mortgage rates and an uptick in the pace of new household formation, which tends to rise as employment conditions improve."
"While some may view rising interest rates in 2016 as a negative for housing, it's unlikely to have an immediate impact on the housing market," Berson continued. "Given the current low level of mortgage rates, as well as solid job growth, it could take a substantial rise in interest rates to dramatically impact the outlook for the housing market."
The Top 10 MSAs in the index are, in order: Springfield, Ill.; Niles-Benton Harbor, Mich.; Milwaukee, Wis.; Akron, Ohio; Dayton, Ohio; Battle Creek, Mich.; Springfield, Ohio; Midland, Mich.; Toledo, Ohio; Saginaw, Mich.
The Bottom 10 MSAs, in order, are: New Orleans-Metairie, La.; Sherman-Denison, Texas; Watertown-Fort Drum, N.Y.; Sioux Falls, S.D.; Hammond, La.; Odessa, Texas; Austin-Round Rock, Texas; Casper, Wyo.; Dallas-Plano-Irving, Texas; Houma-Thibodaux, La.
Showing the most improvement in the past year are, in order: Lima, Ohio; Albany, Ga.; Kalamazoo-Portage, Mich.; Fairbanks, Alaska; Springfield, Ohio; Lansing-East Lansing, Mich.; Toledo, Ohio; Cape Girardeau, Missouri; Binghamton, N.Y.; Niles-Benton Harbor, Mich.
Weakening the most in the past year, in order, are: Sioux Falls, S.D.; Philadelphia, Pa.; Grand Island, Neb.; Charlotte, N.C.; Grand Junction, Colo.; New Orleans-Metairie, La.; Wilmington, N.C.; Kennewick-Richland, Wash.; Fayetteville, N.C.; Las Cruces, N.M.
More information about the HoHM Report, including the methodology used, can be found at www.inthenation.com/housing. The HoHM Report will be released on a quarterly basis online and in print.