What went wrong? The primary culprit for this gloomy forecast is housing affordability—or, more precisely, the lack thereof.
"Housing affordability concerns have been building within the housing market for several years," said David Berson, Nationwide Senior Vice President and Chief Economist. "For the first time since the recovery started, our affordability measures deteriorated enough to drop the national market outlook out of positive and into neutral territory."
Also creating dark clouds for housing was last year’s natural disasters, particularly the hurricanes that damaged residential properties across Florida and Texas.
"The silver lining to this unfortunate story is that this should be a temporary downturn in the impacted coastal areas of Florida and Texas," Berson said. "We should see delinquency rates normalize in coming quarters, which will help to boost the national outlook, perhaps back into positive territory."
Nonetheless, the LIHMM is not all bad news. Nationwide pointed to a vibrant job market and rising wages as being the fuel that is driving housing demand. Nationwide identified the top 10 metro areas in the latest LIHHM report as being Casper, Wyo.; Farmington, N.M.; Alexandria, La.; Canton-Massillon, Ohio; Springfield, Ohio; Cedar Rapids, Iowa; Montgomery Co., Pa.; Trenton, N.J.; Killeen-Temple, Texas; and, Lawrence, Kan. The bottom 10 are: Bismarck, N.D.; Victoria, Texas; Anchorage, Alaska; Lewiston, Idaho-Wash.; Corpus Christi, Texas; Billings, Mont.; Pueblo, Colo.; San Jose-Santa Clara, Calif.; Kennewick-Richland, Wash.; and, Nassau-Suffolk Counties, N.Y.