The risk of price declines in the next two years declined during the first quarter in 75 percent of 384 markets tracked by PMI Mortgage Insurance Co., including 40 of the 50 nation’s most populous metro areas.

PMI’s latest Economic and Real Estate Trends report found that despite the improvements in many markets, slightly more than half of all metros tracked — 198 — still faced an elevated or high risk of price declines.

Among the nation’s 50 most populous metros, the percentage of markets at risk was even higher — 70 percent, up from 68 percent in fourth-quarter 2009.

Metros with an elevated or high risk of price declines typically had higher unemployment rates, higher new foreclosure rates, lower affordability, a larger excess housing supply, and more volatile house prices.

The 20 riskiest housing markets identified by PMI, and the estimated probability that they will see price declines in the next two years, were:

1. Miami-Miami Beach-Kendall, Fla. (99.9)
2. Las Vegas-Paradise, Nev. (99.9)
3. Ft. Lauderdale-Pompano-Deerfield, Fla. (99.9)
4. Riverside-San Bernardino-Ontario, Calif. (99.9)
5. Tampa-St. Petersburg-Clearwater, Fla. (99.9)
6. Orlando-Kissimmee-Sanford, Fla. (99.9)
7. Jacksonville, Fla. (99.9)
8. Los Angeles-Long Beach-Glendale, Calif. (99.9)
9. Santa Ana-Anaheim-Irvine, Calif. (99.7)
10. Phoenix-Mesa-Glendale, Ariz. (99.4)
11. San Diego-Carlsbad-San Marcos, Calif. (98.8)
12. Detroit-Livonia-Dearborn, Mich. (98.7)
13. Sacramento-Arden-Rovesville, Calif. (98)
14. Newark-Union, N.J.-Penn. (94.7)
15. Edison-New Brunswick, N.J. (94.7)
16. Providence-New Bedford-Fall River, R.I.-Mass. (93.6)
17. Oakland-Fremont-Hayward, Calif. (91.9)
18. Nassau-Suffolk, N.Y. (91.5)
19. New York-White Plains-Wayne N.Y.-N.J. (90.4)
20. San Jose-Sunnyvale-Santa Clara, Calif. (90)

All metro markets tracked in Florida and Nevada were judged by PMI to have a 90 percent or greater probability of price declines by the end of the first quarter of 2012.

Risk declined in many markets in California and New York, with 25 of 28 California markets posting lower risk scores. In New York, risk scores for Syracuse and Rochester were down 16.7 percentage points and 14.2 percentage points respectively — the biggest improvements in markets nationwide.

Markets in North Dakota, Nebraska, South Dakota, and Vermont had low-risk scores — North Dakota boasted the lowest risk in the nation, with a 1.1 percent chance of price declines in the state’s highest-scoring market.

Home prices were down in 59 percent of markets tracked, PMI said, citing numbers from loan data aggregator CoreLogic, but the year-over-year decline in national home prices was only 0.5 percent.

The report also looked at the prospects for future growth in household formation, noting the 0.3 percent growth rate in 2009 was the smallest since World War II.

Growth in household formation rebounded to nearly 1 percent during the first quarter,  in line with historical trends.

Growth in household formation often climbs above the long-term trend during a housing recovery, and should hit 1.5 percent or more at some point in this recovery, PMI analysts said.

"That would translate into an additional 1.7 million households — which would go a long way toward reducing the still high levels of rental and homeowner vacancy rates that exist today," the report said.

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