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On the other hand, 18 markets weakened, including three that slipped back to a D grade: Hinesville-Ft. Stewart, Georgia; Port St. Lucie, Florida; and Yuba City, California.

The index is one factor United Guaranty uses when setting prices for private mortgage insurance, which lenders require when homebuyers make down payments of less than 20% of the purchase price. Generally, the greater a city’s price stability, the lower the mortgage insurance premiums.

There were 11 cities previously recognized as stable that have now slipped back into some price declines, UGC said, in markets all across the country.

That stands in contrast to recent evidence that the housing market may have turned a corner, like a nearly two-year high in January for contracts to purchase previously owned U.S. homes. At the same time, investors like Warren Buffett have said housing remains in a depression.

More conflicting data emerged on Wednesday. U.S. mortgage applications have fallen for five weeks running and seven of the 10 weeks this year, according to the Mortgage Bankers Association.

Yet at the same time, the association said, demand for home purchases picked up for the third week in a row last week.

An executive from UGC said their numbers largely tell the story of the housing market in 2011, and that all signs point to things turning for the better already.

“What we’re seeing overall is that there is improvement … we’re seeing generally improvement from 2009, 2010 and I think if you look at upcoming data you’ll see more improvement in the coming year,” said Jerry Bryant, a vice president of risk management for Greensboro, North Carolina-based UGC. “We think there could be a basing later on this year.”

UGC itself barely made it out of the recession. The AIG unit was considered a secondary asset ripe for sale during that company’s bailout, but as competitors struggled it continued growing.

AIG management recently identified UGC as a core part of the insurer’s business, along with global property insurer Chartis and domestic life insurer SunAmerica.

© Thomson Reuters 2012