Most U.S. cities are likely to have lower housing prices two years from now, and 50 of the largest metropolitan areas have a "high probability" of lower prices by the third quarter of 2010, PMI Mortgage Insurance Co. says.
David Berson, the chief economist and strategist at the unit of PMI Group Inc. in Walnut Creek, Calif., said in an interview last week that rising foreclosures and unemployment will offset positive factors such as lower mortgage rates.
"On balance, things are looking worse not better," he said. "The risk of lower prices is increasing in most of the country."
Seven of the 10 worst-performing cities ranked by PMI's index were in Florida. The four worst got a 99.9% risk score, or chance that home prices would be lower in two years.
The 4.2 million existing homes for sale at the end of November were double the average housing inventory of 2 million homes, Mr. Berson said. "We have slightly more than twice as many homes for sale as we would see in a normal period," he said. "That's a huge number."