The latest Multi-Indicator Market Index from government-sponsored enterprise and mortgage servicer Freddie Mac revealed that, on a year-over-year basis, the housing market is continuing to improve.

The February MiMi, released in mid-April, registered a minus 3.11, which was slightly lower than January's reading of minus 3.08 but represented a 0.67-point improvement from February of 2013. Moreover, the three-month trend showed widespread improvement, as more than half of the top 50 metro markets highlighted by Freddie's index have recorded ongoing improvement. That's good news for home buyers living in the largest U.S. cities or their surrounding suburbs, given that affordability has been a concern in many areas where inventory levels were tight toward the end of 2013.

Four indicators contribute to the index: Purchase applications, payment-to-income ratios, mortgage fulfillment rates and employment levels. Freddie Mac compiles data from a variety of sources, including local mortgage lenders with which it works, in an effort to measure the sustainability and health of the housing market both nationally and within more geographically specific areas.

"Despite a slowdown over the winter months, the housing market continues to show improvement in most states, although at a somewhat slower pace," said Frank Nothaft, chief economist for Freddie Mac. "And while not all the MiMi indicators are trending in a better direction - in particular, home-purchase applications have weakened in many areas - gains in local employment and loan performance have really helped many markets across the country, especially those that were hardest hit."

Improvement comes with more supply, consumer confidence

Charlotte, N.C., ranked as the metro market exhibiting the most improvement on a month-to-month basis, with its index score rising 0.10 points. It was followed by Columbus, Ohio (up 0.09), Nashville, Tenn. (0.07), New Orleans (0.07), Las Vegas (0.05), Memphis (0.05) and Miami (0.05).

On a year-over-year gauge, Miami is the most improved through February, having seen its index score rise 2.33 points. Orlando, Fla., with a 1.91-point jump, Las Vegas (1.64), Riverside, Calif. (1.6) and Tampa, Fla. (1.49) rounded out the five metros that have made the most significant gains over the past year. San Antonio, Texas, however, remains the top ranking metro area of all with an index reading of minus 1.27, up from minus 2.44 a year ago.

On the state level, South Carolina, Louisiana, Ohio, Tennessee and Nevada showed the most substantial month-to-month improvements. Annually, Florida's index reading has jumped 1.87 points, representing the best year-over-year rise, followed by Nevada, California, South Carolina and Texas. North Dakota ranked atop the state list overall with a reading of minus 0.48.

Market opportunities

In essence, the MiMi serves to represent which housing markets are most stable. The closer a state or metro area's reading is to zero, the more stable it is considered - meaning home prices are less susceptible to volatility and the local supply is at a healthy level that bodes well for both buyers and sellers. For example, the Washington, D.C., market, which had been considered one of the strongest for much of 2013, has been on a downward trend because of weakening rates for mortgage applications, employment levels and residents' earnings - all of which factor directly into the MiMi. Until inventory levels improve or the average income begins to rise, it's unlikely the application rate will improve significantly.

Of course, there are still many viable options for prospective buyers throughout the country, even in the seemingly crowded major metro areas. Even in markets where inventory is tighter, house hunters should not allow their urgency to cause them to sacrifice due diligence. Conducting a proper home inspection and securing title insurance are essential to both peace of mind and the return on the investment that comes with any home purchase.