Although a vast majority of local housing markets are in good shape, areas that rely on energy — especially Texas — could see conditions deteriorate.
The U.S. Leading Index of Healthy Housing Markets landed at 104.3 as of the second quarter. It was the lowest level in two years for the index.
Still, an index level that is higher than 100 suggests that the housing market is healthy and has a lower chance of a downturn during the next year.
Those were some of the findings detailed in the
Health of Housing Markets Report 2016 Q2 from Nationwide. The report evaluates the housing health for the nation and for 400 metropolitan statistical areas.
Among the variables considered in the ranking are employment, demographics, the mortgage market and house prices.
The current index reflects continued strength in the job market, solid gains in home prices and a meaningful drop in 90-day mortgage delinquency rate and foreclosure rate. It also reflects sluggish household growth.
“As mortgage market conditions steadily improve, housing is expected to remain a bright spot in the U.S. economy,” the Columbus, Ohio-based insurance company
said in an accompanying statement.
The MSA considered to be the strongest was Harrisburg-Carlisle, Pennsylvania. In fact two MSAs in Pennsylvania — including No. 7 Bloomsburg-Berwick — were
among the top 10.
No. 2 Saginaw and No. 3 Lansing-East Lansing were among three Michigan MSAs in the top-10 list.
Fourth was Memphis, Tennessee-Mississippi-Arkansas, followed by Manhattan, Kansas.
“The vast majority of metro areas across the country are healthy, indicating that few regional housing markets are vulnerable to a housing downturn in the near term,” the study said.
At the other end of the spectrum was the Bismark, North Dakota, MSA. Second-worst was the Casper, Wyoming, MSA.
The poor rankings suggest potential housing slowdowns over the next year.
“The energy sector slowdown is weighing heavily on job growth and housing sustainability in certain areas, including portions of Texas, North Dakota, Wyoming and Louisiana,” the announcement stated.
The remaining 10-worst MSAs were all located in Texas.
“Texas is among the least sustainable states in the country right now, with nearly all MSAs rated as negative or neutral due to oil price declines or overheated markets,” Nationwide said.
The report indicated that the Texas MSAs of Austin and Waco have slightly negative rankings, while Dallas and Houston are close but neutral, because of rapid house-price growth rather than energy impacts.
