Home prices are more likely to go down in states with economies driven by the energy industry than across the country overall, according to a report from Arch Mortgage Insurance.
Nationwide, the probability of home price declines was just 5%, Arch found in its Arch MI Risk Index released Tuesday. Arch noted that over the next few years home price growth is expected to outpace inflation due to affordability, strong job growth and household formations outpacing supply.
But it's a different story in states dominated by energy extraction that have been adversely affected by the downturn in energy prices.
North Dakota had the highest risk with a 52% likelihood that home prices will fall. Wyoming came in second with 46% probability, followed by West Virginia at 35%, and New Mexico and Alaska both at 30%.
These states have seen total employment drop because of low energy prices and also see a higher rate of out-migration than other parts of the country. North Dakota, in particular, has seen large numbers of workers leave the state, many of whom came to it during the fracking boom that started in 2010.
Arch also noted that Texas remained in a better position than other energy-rich states despite its own large energy industry because of its diversified economy. Nevertheless, Houston and Fort Worth had the highest risk of price declines at the metropolitan level in the country at 39% and 16% probabilities, respectively.
