MBS Highway Housing Index, December 2024
Following a big drop in November, the MBS Highway Housing Index rose one point in December as the recent surge in bond yields and mortgage rates partially reversed course.
National Data
The MBS Highway National Housing Index in December 2024 rose 1 point month-over-month to 32. This compares with a 3 point gain at the same time last year (31 → 34).
Intriguingly, this could be the third consecutive year that the overall index bottomed in November. Since existing home sales typically only trough in January, it’s likely that the ‘pattern’ we’re seeing simply reflects prevailing mortgage rates, which (coincidentally?) hit near term peaks in late October/early November in each of the past three years.
After plunging 15 points to 24 in November, the Buyer Activity sub-index regained some ground in December, rising 2 points to 26. As a reminder, mortgage rates had jumped nearly 100 basis points (1%) between the Fed’s first rate cut on September 18 and the U.S. Presidential Election on November 5. Since then, average 30-year mortgage rates have moved back below 7%, providing some relief to prospective buyers.
The national Price Direction sub-index rose one point to 38 in December 2024. A year ago, the national Price Direction sub-index was at 41. Notably, the Price Direction index continues to be stronger than the Buyer Activity index, reflecting home prices that are supported by limited supply in the majority of markets.
Intriguingly, this could be the third consecutive year that the overall index bottomed in November. Since existing home sales typically only trough in January, it’s likely that the ‘pattern’ we’re seeing simply reflects prevailing mortgage rates, which (coincidentally?) hit near term peaks in late October/early November in each of the past three years.
After plunging 15 points to 24 in November, the Buyer Activity sub-index regained some ground in December, rising 2 points to 26. As a reminder, mortgage rates had jumped nearly 100 basis points (1%) between the Fed’s first rate cut on September 18 and the U.S. Presidential Election on November 5. Since then, average 30-year mortgage rates have moved back below 7%, providing some relief to prospective buyers.
The national Price Direction sub-index rose one point to 38 in December 2024. A year ago, the national Price Direction sub-index was at 41. Notably, the Price Direction index continues to be stronger than the Buyer Activity index, reflecting home prices that are supported by limited supply in the majority of markets.
Regional Data
In December 2024, Buyer Activity levels rose in six out of seven regions, with the Northwest recording by far the largest increase (18 → 30) following a disastrous drop (46 → 18) the preceding month. The Northeast region bucked the positive trend, with its Buyer Activity index falling 9 points (41 → 32) and ceding the top spot to the Mid-Atlantic region (37 → 41). All seven regions’ Buyer Activity indexes remained below the 50 breakeven point between expansion and contraction.
Four of the seven regions also saw their Price Direction sub-indexes move higher, though the increase was generally modest. Only the Northeast (60) and Mid-Atlantic regions (57) kept their Price-Direction sub-index above 50.
"After plunging in November on sharply higher mortgage rates, our overall index recovered slightly in December. The Fed cut short-term rates by 25 basis points two days after the election, and the Fed Funds Rate futures market is currently pricing in a high probability of another 25 basis point cut on December 18. Eventually, mortgage rates will follow the Fed Funds Rate lower. Our forecast for 2025 is for mortgage rates to drop to 5.75% by year-end, with national home prices rising 4% year-over-year,” said Barry Habib, MBS Highway’s Founder and CEO.
In December 2024, Buyer Activity levels rose in six out of seven regions, with the Northwest recording by far the largest increase (18 → 30) following a disastrous drop (46 → 18) the preceding month. The Northeast region bucked the positive trend, with its Buyer Activity index falling 9 points (41 → 32) and ceding the top spot to the Mid-Atlantic region (37 → 41). All seven regions’ Buyer Activity indexes remained below the 50 breakeven point between expansion and contraction.
Four of the seven regions also saw their Price Direction sub-indexes move higher, though the increase was generally modest. Only the Northeast (60) and Mid-Atlantic regions (57) kept their Price-Direction sub-index above 50.
"After plunging in November on sharply higher mortgage rates, our overall index recovered slightly in December. The Fed cut short-term rates by 25 basis points two days after the election, and the Fed Funds Rate futures market is currently pricing in a high probability of another 25 basis point cut on December 18. Eventually, mortgage rates will follow the Fed Funds Rate lower. Our forecast for 2025 is for mortgage rates to drop to 5.75% by year-end, with national home prices rising 4% year-over-year,” said Barry Habib, MBS Highway’s Founder and CEO.
Methodology
MBS Highway’s monthly Housing Index provides an accurate and real-time read on buyer activity and home price direction both nationally and regionally in the U.S. housing market. This survey of 30,000 mortgage and real estate professionals fills a crucial industry need for insights that reflect buyers’ immediate experiences, helping mortgage loan originators to better serve homebuyers.
The MBS Highway Housing Survey is comprised of two separate component indices: buyer activity and home price direction. Each month, respondents rank buyer activity as “active,” “steady,” or “slower,” and home price direction as “price increases,” “steady,” or “price reductions.” A national and regional index is calculated for each component index by applying the formula “[active + (steady/2)]” for buyer activity, and “[price increases + (steady/2)]” for home price direction. The score for each component index is then used to calculate the MBS Highway Housing Index by applying the formula "[(national buyer activity/2) + (national home price direction/2)].
Any number over 50 indicates expansion while a number below 50 indicates contraction. The MBS Highway Housing Index can range between 0 and 100.
Dan Habib, MBS Highway’s Chief Revenue Officer, explained, “There are a few reliable housing reports available in the market, most of which are delayed by two months. Because MBS Highway has a large base of mortgage and real estate clients, we felt we were in a unique position to capture real-time housing data from our subscribers, who are on the front lines of the housing market.”
MBS Highway’s monthly Housing Index provides an accurate and real-time read on buyer activity and home price direction both nationally and regionally in the U.S. housing market. This survey of 30,000 mortgage and real estate professionals fills a crucial industry need for insights that reflect buyers’ immediate experiences, helping mortgage loan originators to better serve homebuyers.
The MBS Highway Housing Survey is comprised of two separate component indices: buyer activity and home price direction. Each month, respondents rank buyer activity as “active,” “steady,” or “slower,” and home price direction as “price increases,” “steady,” or “price reductions.” A national and regional index is calculated for each component index by applying the formula “[active + (steady/2)]” for buyer activity, and “[price increases + (steady/2)]” for home price direction. The score for each component index is then used to calculate the MBS Highway Housing Index by applying the formula "[(national buyer activity/2) + (national home price direction/2)].
Any number over 50 indicates expansion while a number below 50 indicates contraction. The MBS Highway Housing Index can range between 0 and 100.
Dan Habib, MBS Highway’s Chief Revenue Officer, explained, “There are a few reliable housing reports available in the market, most of which are delayed by two months. Because MBS Highway has a large base of mortgage and real estate clients, we felt we were in a unique position to capture real-time housing data from our subscribers, who are on the front lines of the housing market.”