Where are the most stable US housing markets?

March 31st, 2014

Although not all markets are stable, many are seeing improvements.

Mortgage rates fluctuate week by week, so it can be hard to know when it is a good time to buy a home. While there’s no perfect answer to this question, a new index from government-sponsored entity Freddie Mac can at least help by telling you which metro areas have the most stable housing markets in the country.

Named the Multi-Indicator Market Index, this resource looks at the housing markets in all 50 states and the District of Columbia, plus in the top 50 metro markets. As the U.S. moves into spring and homebuying picks up, now is a great time to see if your location has a stable market.

A market’s stability is measured by looking at its level of homebuying and selling activity. If an area’s market is too weak and there isn’t enough demand for houses, the market is considered unstable. On the other side of the spectrum, if there are way more homebuyers than there are houses on the market, overheating the market to an unsustainable level, the market is also considered unstable by the index.

So essentially, a housing market is “stable” if there is a good balance of buyers and sellers, enough to keep the market moving at a sustainable pace.

  • Which states have the most stable housing markets? According to the index, the top five are North Dakota, the District of Columbia, Wyoming, Alaska and Louisiana.
  • Which metro areas have the most stable housing markets? The report cited San Antonio; Houston; and Austin, Texas as well as New Orleans, La. as the four metros that are the most stable.

Data from December to January also showed that the Florida, Tennessee, Michigan, Nevada and Texas markets are experiencing the greatest improvement. This means they are moving closer to a balanced level of homebuying demand compared to the number of homes on the market. Prices are on the way up, benefiting sellers, while simultaneously staying affordable enough for buyers. This kind of equilibrium helps the housing market and economy grow while not doing so at an unsustainable pace.

“We’re seeing a few themes from the nation’s improving housing markets,” said Len Kiefer, deputy chief economist at Freddie Mac. “In many markets, a better employment picture, along with some income growth, makes it possible for more people who are considering buying a home to stay within reasonable payment-to-income ratios on their monthly mortgages.”