The chances of home prices falling further lessened in the first quarter of 2010 compared to the previous quarter, according to a new study from mortgage insurer the ""PMI Group"":http://www.pmi-us.com/.
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The company's ""U.S. Market Risk Index"":http://phx.corporate-ir.net/phoenix.zhtml?c=63356&p=irol-newsArticle&ID=1458310&highlight â€" which assesses the probability (ranging from zero to 100) that the price of homes in a given metro area will be lower at the end of the next two years â€" dropped to 51.9 from 53.8.
It was the third consecutive quarterly decrease in the overall reading, and PMI says it signals ""continued improvement in the housing market.""
However, the company noted that there were fewer metropolitan statistical areas (MSAs) with lower risk scores compared with the previous quarter. The company explained that this anomaly reflects a decrease in affordability and higher mortgage rates during the first quarter of 2010 compared with the end of 2009.
[COLUMN_BREAK]Although 290 (75.5 percent) of the MSAs included in PMI's study are less at risk of seeing lower home prices in two years than they were in the previous quarter, more than half (51.6 percent) are still in the high-risk category.
PMI says generally, the high-risk MSAs had higher unemployment rates, higher new foreclosure rates, lower affordability, a larger excess housing supply, and more volatile housing prices compared with the MSAs in the minimal to moderate risk categories.
Home sellers in Columbus, Ohio can shelve any anxiety that they'll be dealing with deflated property values within the next two years, based on PMI's assessment. It was the only metro area to boast a minimal risk score of below 10.
In Florida and Nevada, risk index scores remained in the 90s -- the high 90s in many MSAs. New Jersey and Arizona also had very high-risk scores in the first quarter.
In California, 25 of its 28 MSAs included in the study had lower risk scores in the first quarter of 2010, compared with the fourth quarter of 2009.
""Household formation is the most important demographic driver of housing demand, and faster growth, as has occurred over the period since the middle of 2009 corresponding to a pickup in the economy, should lead to greater market stability,"" said David Berson, PMI's chief economist and strategist. ""Ultimately greater stability of house prices will lead to declines in the risk index,"" Berson explained.