Continued deceleration in home price appreciation and decreased affordability caused the risk of home price declines to rise in cities across the country, PMI Mortgage Insurance Co., the U.S. subsidiary of The PMI Group, Inc. (NYSE: PMI) reported today. Economic fundamentals remain strong in most areas, however, with historically low unemployment rates and strong job growth, which helps mitigate the risk of price declines.

"Years of rapid appreciation have made homes less affordable in many areas, and that's not sustainable over the long term, so what we are seeing is not unexpected," said Mark F. Milner, Chief Risk Officer of PMI Mortgage Insurance Co. "Over time, moderating appreciation will bring prices back in line with economic fundamentals, particularly incomes, bringing the market back to a healthy balance."

PMI U.S. Market Risk Index(SM) scores increased for 34 of the nation's 50 largest metropolitan statistical areas (MSAs), resulting in an increase in the average score from 328 to 342, which translates into a 34.2 percent chance that home prices will decline in two years. Nineteen MSAs face a greater than 50 percent chance that home prices will decline, up from 18 last quarter.

While year-over-year appreciation remained in the double digits in 14 of the 50 largest MSAs, the rate of appreciation slowed in 43. Three MSAs-Detroit and neighboring Warren, MI, and Cambridge, MA-saw slight year over year price declines.

The risk of price declines continues to be concentrated in California and along the Eastern Seaboard. Of the 19 MSAs facing a greater than 50 percent chance of a price decline, eight are located in California, eight are in the Northeast, and two are in Florida.

In addition to the PMI U.S. Market Risk Index showing the risk of price declines, PMI's Fall 2006 Economic and Real Estate Trends(SM) (ERET) examines major regional trends, as well as statistics commonly used to judge the housing market's current health and future prospects.

In most areas, the risk of price declines continues to be balanced by strong economic fundamentals. With the exception of the upper Midwest, unemployment remains low in most of the country and job growth is positive. Of the top 50 MSAs all but four-Detroit and Warren, MI, Cleveland, OH, and Indianapolis, IN-saw employment growth. New Orleans led the nation in employment growth at 8.37 percent over the past year, followed closely by Las Vegas, NV at 5.38 percent.

A complete copy of the Winter 2007 PMI ERET report and an appendix that provides data for all U.S. MSAs is available at http://phx.corporate-ir.net/phoenix.zhtml?c=63356&p=irol-publications .

Winter 2007 PMI U.S. Market Risk Index

Sacramento-Arden-Arcade- Detroit-Livonia-

Roseville, CA 604 Dearborn, MI 389

San Diego-Carlsbad- Warren-Troy-

San Marcos, CA 603 Farmington Hills, MI 247

Oakland-Fremont-

Hayward, CA 603 Philadelphia, PA 206

Santa Ana-Anaheim- Portland-Vancouver-

Irvine, CA 602 Beaverton, OR-WA 197

Nassau-Suffolk, NY 601 Atlanta-Sandy Springs-

Marietta, GA 190

Riverside-San Bernardino-

Ontario, CA 600 Denver-Aurora, CO 188

Los Angeles-Long Beach- Seattle-Bellevue-

Glendale, CA 597 Everett, WA 167

Boston-Quincy, MA 595 Milwaukee-Waukesha-

West Allis, WI 143

Providence-New Bedford- Chicago-Naperville-

Fall River, RI-MA 595 Joliet, IL 140

San Jose-Sunnyvale-

Santa Clara, CA 592 St. Louis, MO-IL 137

San Francisco-San Mateo-

Redwood City, CA 588 Kansas City, MO-KS 114

Edison, NJ 586 Austin-Round Rock, TX 107

Fort Lauderdale-Pompano New Orleans-Metairie-

Beach-Deerfield Beach, FL 579 Kenner, LA 106

Washington-Arlington- Charlotte-Gastonia-

Alexandria, DC-VA-MD-WV 568 Concord, NC-SC 97

New York-White Plains- Nashville-Davidson-

Wayne, NY-NJ 566 Murfreesboro, TN 83

Cambridge-Newton- Houston-Sugar Land-

Framingham, MA 563 Baytown, TX 82

Las Vegas-Paradise, NV 550 Dallas-Plano-Irving, TX 82

Newark-Union, NJ-PA 549 Cleveland-Elyria-

Mentor, OH 78

Miami-Miami Beach-

Kendall, FL 535 San Antonio, TX 75

Baltimore-Towson, MD 498 Columbus, OH 74

Tampa-St. Petersburg-

Clearwater, FL 494 Fort Worth-Arlington, TX 73

Virginia Beach-Norfolk- Cincinnati-

Newport News, VA-NC 491 Middletown, OH-KY-IN 71

Phoenix-Mesa-

Scottsdale, AZ 448 Memphis, TN-MS-AR 68

Orlando-Kissimmee, FL 447 Indianapolis-Carmel, IN 64

Minneapolis-St. Paul-

Bloomington, MN-WI 402 Pittsburgh, PA 62

About PMI's Economic & Real Estate Trends(SM) (ERET) and U.S. Market Risk Index(SM)

The PMI Economic and Real Estate Trends (ERET) containing the US Market Risk Index is published quarterly by PMI Mortgage Insurance Co., a subsidiary of The PMI Group, Inc. (NYSE: PMI). The Risk Index is a proprietary statistical model that measures geographic house-price risk by predicting the probability of a regional decline in home prices in the nation's 50 largest metropolitan statistical areas (MSAs) and metropolitan statistical area divisions (MSADs) over the next two years. The PMI U.S. Market Risk Index is based on the House Price Index from the Office of Federal Housing Enterprise Oversight (OFHEO), labor market statistics from the Bureau of Labor Statistics, and the PMI Affordability Index, which uses local median household income, home price appreciation, and the price of a conventional mortgage to calculate the local share of mortgage payment to income relative to its baseline year of 1995.

The PMI U.S. Market Risk Index scale ranges from one to 1,000 and translates to a percentage. For example, a score of 100 indicates a 10 percent chance of a decline in home prices over the next two years. A higher score indicates a higher likelihood of future home price declines. The Risk Index scale is linear. In other words, an increase in risk index score of 100 percent (for example, from 100 to 200) indicates that the risk of home price decline has doubled. Conversely, a decline in Risk Index score by 50 percent (from 100 to 50) indicates that the risk of home price decline has declined by 50 percent. The Affordability Index score is linear against a baseline of 100 in 1995. For example, an Affordability Index score of 85 means that the median home in that area is 15 percent less affordable than it was in 1995.

About PMI Mortgage Insurance Co.

PMI Mortgage Insurance Co. (PMI US), a subsidiary of The PMI Group, Inc. (NYSE: PMI), provides residential mortgage insurance to mortgage lenders, capital market participants, and investors throughout the United States. PMI US is incorporated in Arizona, headquartered in Walnut Creek, CA, and licensed in all 50 states, the District of Columbia, Puerto Rico, Guam, and the Virgin Islands. By mitigating default risk, residential mortgage insurance expands home ownership opportunities and assists financial institutions in reducing the capital they are required to hold against low down payment mortgages. PMI US is rated AA by Standard and Poor's, Aa2 by Moody's, and AA+ by Fitch. For more information: http://www.pmi-us.com .

Cautionary Statement: Statements in this press release that are not historical facts or that relate to future plans, events or performance are 'forward-looking' statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to, PMI's U.S. Market Risk Index and any related discussion, and statements relating to future economic and housing market conditions. Forward-looking statements are subject to a number of risks and uncertainties including, but not limited to, the following factors: changes in economic conditions, economic recession or slowdowns, adverse changes in consumer confidence, declining housing values, higher unemployment, deteriorating borrower credit, changes in interest rates, or a combination of these factors. Readers are cautioned that any statements with respect to future economic and housing market conditions are based upon current economic conditions and, therefore, are inherently uncertain and highly subject to the changes in the factors enumerated above. Other risk and uncertainties are discussed in the Company's filings with the Securities and Exchange Commission, including our report on Form 10-K for the year ended December 31, 2005 and Form 10-Q for the quarter ended September 30, 2006.

Source: prnewswire