Magazine article Mortgage Banking

PMI U.S. Market Risk Index Shows Third Straight Decline

Magazine article Mortgage Banking

PMI U.S. Market Risk Index Shows Third Straight Decline

Article excerpt

Walnut Creek, California-based The PMI Group Inc. reported that its third-quarter U.S. Market Risk Index (based on first-quarter data) fell to 51.9 from 53.8. That marked the third consecutive quarterly decline in the risk index, which portrays the risk of home prices being lower at the end of the next two years. The higher the index reading, the greater the likelihood of price declines.

The index performance this year reflects continued improvement in the housing market, but it wasn't all good news. In the third quarter, the number of metropolitan statistical areas (MSAs) with lower risk scores declined compared with the previous quarter.

PMI reported that although 75.5 percent of the nation's MSAs are less risky than the previous quarter, more than half (51.5 percent) are still in the high-risk category. PMI's risk scores translate directly into a probability that the price of homes in a given MSA will on average be lower at the end of the next two years.

Of the nation's top 50 MSAs, 28 had a risk score higher than 70, while only one--Columbus, Ohio--had a minimal risk score of below 10.

In a press release announcing the latest index findings, PMI noted, "In Florida and Nevada, Risk Index scores remained in the 90s--the high 90s in many MSAs. …

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