Nationwide’s Health of Housing Markets Report
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Next Release: June 9, 2020
2020Q1 HoHM Report: Housing market health remains solid for 2020
- While the risk that the coronavirus outbreak will disrupt economic activity has increased significantly, the national LIHHM* projects that the housing sector will remain a source of growth for the economy in 2020. The key to this positive outlook is strong underlying housing demand factors — including above-trend household growth, solid job gains, and low mortgage rates.
- Regionally, housing trends have improved in many local markets with more than half of metro areas showing a positive ranking this quarter. This suggests that the odds of a downturn in most housing markets during 2020 are low.
- While mortgage delinquencies and foreclosures are not a concern at present, some homeowners could be at greater risk during the next economic downturn. Looser lending standards for FHA, VA, and jumbo loans since 2012 suggest that these loan types would be more vulnerable than plain vanilla conventional, conforming loans to worsening economic conditions.
Housing outlook remains positive, aided by strong demand drivers
The national LIHHM at the end of 2019 was 106.1 which, after data revisions to previous quarters, marked the sixth-straight quarterly gain for this metric. Demand factors continue to drive the positive outlook led by low mortgage rates, above-trend household formations, the lowest unemployment rates in 50 years, and rising incomes. The serious delinquency rate has declined in each of the last six quarters and has fallen to a healthy level below 2.0 percent. House price gains have accelerated again in response to excess homebuyer demand with existing home sale supply levels very tight. Still, price growth remains near the long-term average and, with low mortgage rates, is keeping housing affordability positive.
Regionally, well over half of the LIHHM performance rankings are positive and indicate a high degree of sustainability for housing in those local markets. Household formations have increased regionally while unemployment rates remain low, supporting housing demand in most metro areas across the country. Additionally, rising incomes have kept pace with house price gains, helping to keep homes relatively affordable in many areas.
This material is provided by Nationwide Economics and is general in nature. It is not intended as investment or economic advice, or a recommendation to buy or sell any security or adopt any investment strategy. Additionally, it does not take into account the specific investment objectives, tax and financial condition or particular needs of any specific person. We encourage you to seek the advice of an investment professional who can tailor a financial plan to meet your specific needs. The economic and market forecasts in this report reflect our opinion as of the date of this presentation/review and are subject to change without notice. These forecasts show a broad range of possible outcomes. Because they are subject to high levels of uncertainty, they may not reflect actual performance. Case studies and examples are for illustrative purposes only. We obtained certain information from sources deemed reliable, but we do not guarantee its accuracy, completeness or fairness.