The risk of price declines over the next two years has risen in the nation's 50 largest housing markets, but a "soft landing" is likely, according to PMI Mortgage Insurance Co., Walnut Creek, Calif.The median risk index value in the PMI U.S. Market Risk Index rose 25% in the fourth quarter, increasing from 134 to 168, the company reported. This means the probability of experiencing a home price decline in the next two years has risen from 13.4% to 16.8% in the 50 largest housing markets. "We expected what we are seeing in the third-quarter data, which is a moderating of appreciation that, over time, is likely to bring prices back into line with the economic fundamentals that support them, particularly incomes," said Mark Milner, chief risk officer of PMI Mortgage Insurance. Mr. Milner said he believes that a gradual slowing of appreciation will contribute to a soft landing as long as the U.S. and regional economies stay robust. According to the index, there are now 11 markets with a greater than 50% chance of price declines over two years, up from five in the third quarter. PMI can be found online at http://www.pmigroup.com.

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