More markets are seeing home-price declines, but the severity of the declines appears to be moderating, according to a quarterly forecast of mortgage risk compiled by First American CoreLogic.

A "moderating trend" in price declines over the last two quarters "indicates that the house-price rate of decline is slowing down, a first step toward the bottoming out of price declines," First American CoreLogic's third-quarter CoreMortgageRisk Monitor concludes.

The increasing stock of real estate-owned properties, the economy and inflationary risks could still spell trouble, "but for now we view the trend data as a glimmer of hope for the market."

Home prices in 380 markets tracked by the forecast fell by an average of nearly 11 percent from a year ago. Nearly 200 markets saw price declines, up from 176 in the second quarter and 143 in the first quarter.

While more markets are seeing price declines, the most severe declines remain concentrated in states that saw the most speculation during the boom. The 40 worst markets, which have all seen prices fall at least 15 percent in the last year, are in California, Florida, Arizona and Nevada.

The survey's Core Mortgage Risk Index, which forecasts delinquency risk, was up 12 percent from a year ago and 55 percent above a baseline established in 2002 at the end of the dot-com bust.

"Although significantly higher now than during this base period, the CMRI is likely to continue rising nationally over the next 18 months," the forecast predicted.

While fraud and collateral risk had been the major factors driving up the risk of delinquency beginning in late 2005, by late 2007 "the rapid decline in home prices began to quickly overwhelm all other factors driving risk," First American CoreLogic said.

Eight of the 10 markets identified as having the highest risk of delinquencies were in California. Outside of California and Florida, the riskiest markets in the rest of the country included Las Vegas, Phoenix, and Washington, D.C.

Markets seeing home-price appreciation were concentrated in five states: Texas, Pennsylvania, Indiana, Alabama and Iowa. Each of those states had at least six markets where prices increased more than 2 percent during the last year, First American CoreLogic said.