Single-family real estate 'stable'
January 19, 2004
Washington, D.C., Orange County, Calif., maintain 'strong' 4th quarter markets
Mortgage Guaranty Insurance Corp. today reported that its national Market Trends Index remained at 6.58 in the fourth quarter, the same as it was for the third quarter 2003.
"The national economy started to show some improvement, as demonstrated in real GDP – improved income trends and business investment," said Neil Siegel, MGIC's senior market analyst. "However, the housing sector has not yet reflected these changes."
MGIC's MTI is based on the Market Trend Analysis Report produced quarterly by MGIC's Credit Policy Department, using lagging three-month market data from 73 Metropolitan Statistical Areas (MSAs). The index is a barometer of single-family real estate market conditions with readings ranging from 1 to 10. A reading of 1 indicates a weak market showing no signs of improvement; a reading of 10, a strong market with no signs of deterioration. A reading of 6 to 8 indicates a stable market.
Siegel notes that 9 of the 73 markets tracked by MGIC are currently experiencing "soft" or "weak" single-family housing market conditions, no change from the previous quarter.
"Overall, the national housing market is still considered stable," notes Siegel. "With home price appreciation slowing versus a year ago, existing-home sales recorded a double-digit gain. This helped keep the supply of existing homes low – in the range of 4-5 months."
In the fourth quarter, none of the 73 markets had the "current conditions" component of their rating changed. Two markets had the "short-term projection" component of their rating downgraded in the quarter: Orlando, Fla., and Springfield, Mass., while the "short-term projection" for Austin, Texas, and New Orleans was upgraded.
Of the 58 markets currently rated as "stable" in MGIC's Market Trend Analysis, 20 have a short-term projection of "softening" and three have a short-term projection of "improving."
Austin, Buffalo, Detroit, Indianapolis, Rochester, San Francisco, Salt Lake City and Tulsa are currently "soft," and San Jose is currently rated "weak." On the other end of the spectrum, Orange County, Calif.; Riverside-San Bernardino, Calif.; San Diego; Orlando; Tampa and Washington, D.C., are currently "strong," according to MGIC's Market Trend Analysis.
"Many economists still predict home sales to slow in 2004," said Siegel. "Most of this is due to a projected rise in mortgage interest rates. But, the improved economic conditions may be enough to offset this trend."
MGIC is a provider of private mortgage insurance coverage.
Copyright: Inman News Features